Radio group Austereo to back $707 million takeover from Southern Cross Media Group

Regional television and radio group Southern Cross Media Group has launched a $707 million takeover offer for listed radio company Austero, which owns the 2Day, Fox and Triple M networks.

Austereo became a takeover target after Village Roadshow, which owns a 52.52% stake in Austereo announced it wanted to sell its shares.

Village Roadshow, which is carrying $1.3 billion in debt, will pocket $389.3 million from the deal if it goes through.

Village Roadshow chairman Robert Kirby – who controls the company with his brother John and chief executive Graham Burke – said in a statement that the proceeds of the sale will be used to reduce debt and is “consistent with VRL’s objectives of creating a stronger, more flexible, balance sheet and maximising value for all VRL shareholders.”

However, the deal is likely to increase speculation that the Kirbys and Burke could be set to privatise Village Roadshow, an idea they floated last year but were unable to follow through with.

Such a deal would be much more attractive now Village Roadshow’s debt load has been significantly reduced.

Southern Cross Media is currently focused on regional television and regional radio operations, after selling its metropolitan “talk” stations to Fairfax Media in 2008.

The deal will see the company control stations in seven capital city and 37 regional areas, as well as 33 regional television stations.

Southern Cross Media chief executive Rhys Holleran said in a statement the deal would allow the combined group to use content across its networks.

“We see real potential to offer our premium content across a national platform and apply capabilities in metro radio to enhance our local radio offering.”