Australia's Seven on halt after KKR buyout report

Published: Monday, November 20, 2006, 6:03 [IST]
 

MELBOURNE, Nov 20 (Reuters) Australia's Seven Network Ltd. shares were put on a trading halt on Monday pending an announcement, after a media report said it was finalising a A$3.5 billion ($2.7 billion) deal to go private, backed by U.S. private equity giant Kohlberg Kravis Roberts [KKR.UL].

The Australian Financial Review said in an unsourced report that Seven, controlled by media mogul Kerry Stokes, was considering two options -- a full privatisation, or a partial sale of around a 50 percent stake.

The latter option would be similar to Publishing and Broadcasting Ltd.'s deal to sell a 50 percent stake in its media assets to CVC Asia Pacific [CVC.UL].

A buyout would value Seven at A$3.5 billion, of which $1 billion is equity and $2.5 billion debt.

The paper said the final structure of the deal would be pitched at a significant premium to Seven's latest share price of A$10.58 to secure the support of Seven's independent directors and win over minority shareholders.

The move would cash up Seven for takeovers next year when a law comes into effect allowing owners of one media platform -- newspapers, radio or television -- to own a second platform in the same market.

Seven has already positioned itself, grabbing a 14.9 percent stake in West Australian Newspapers Holdings Ltd.

last month.

Other industry heavyweights and private equity groups have been manoeuvring ahead of the anticipated media shake-up, although no date has been set yet for the relaxed cross-ownership and foreign ownership rules to come into force.

KKR was reported to have been pipped at the post in buying the 50 percent stake in PBL's media assets.

Rupert Murdoch's News Corp. bought a 7.5 percent stake in its main Australian newspaper rival John Fairfax Holdings Ltd. and Macquarie Media Group bought a 13.8 percent stake in radio and TV station owner Southern Cross Broadcasting Ltd. .

Irish media group Independent News and Media is also leading a buyout of APN News & Media Ltd. .

KKR has been scouring Australia for assets, after having making its first investment in the country in June buying the Cleanaway waste management business and an industrial services business from Brambles Industries Ltd. for A$1.83 billion.

It led an A$18.2 billion attempt to buy Australian retailer Coles Myer Ltd. , but withdrew the bid last month after the Coles board rejected it.

Reuters DKS PM0530


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