The Australian Competition and Consumer Commission (ACCC) has given the deal the thumbs up. The ACCC concluded that combining the companies won’t affect media competition in a major way.
Despite the good news, the Seven West Media share price is tumbling. At the time of writing, it is trading at 62 cents, 3.91% lower than its previous close.
Let’s take a closer look at the acquisition and the ACCC’s verdict.
Seven West share price slides despite ACCC approval
For the second time in 2 years, Seven West Media is trying to buy fellow Australian media entity, Prime Media.
Seven announced it was going to make a second attempt to buy Prime Media in early November. The ACCC has approved the deal, as it did back in 2019, but Seven still has to win over Prime shareholders.
That was the hurdle that tripped up the pair’s first proposed merger in 2019. It was scrapped when 53.5% of Prime Media shareholders voted against the transaction.
The Prime Media Board has unanimously recommended that shareholders vote in favour of this second proposal.
ACCC chair, Rod Sims said that while the merger received the watchdog’s approval in 2019, the media market’s importance drove it to conduct another review.
Consistent with our findings in 2019, we concluded that the proposed acquisition was unlikely to substantially lessen competition or choice for advertisers and consumers. This is because Seven West Media and Prime are not particularly close competitors in the supply of advertising opportunities or the supply of media content, and other competitors will constrain the merged entity.
Prime Media’s shareholders will cast their vote on the acquisition on 23 December.
The Seven West Media share price is up 18% since it announced its second attempt to buy Prime on 1 November.
The Seven West Media share price is also 70% higher than it was at the start of 2021.