Seven West Media (ASX:SWM) share price dips despite ACCC green light on Prime Media deal

Thursday has brought good and bad tidings for Seven West Media…

| More on:
A team of people giving the thumbs up sign after the ACCC approved the Seven West Media acquisition of Prime Media Group

Image source: Getty Images

The Seven West Media Ltd (ASX: SWM) share price is in the red today despite good news regarding its planned acquisition of Prime Media Group Limited (ASX: PRT).

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.

Sims commented:

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.

Should you invest $1,000 in Seven West Media right now?

Before you consider Seven West Media, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Seven West Media wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Mergers & Acquisitions