In the matter of Seven West Media Limited

By Originating Process filed on 10 October 2025, the Plaintiff, Seven West Media Limited (“Seven”) seeks orders under ss 411 and 1319 of the Corporations Act 2001 (Cth) (“Act”) in respect of a proposed scheme of arrangement between Seven and its shareholders.

By way of background, Seven is an Australian public company limited by shares and listed on the Australian Securities Exchange (“ASX”). Seven is an Australian media company, with a presence across broadcast television, publishing and digital media. Seven and Southern Cross Media Group Limited (“Southern Cross”) entered into a Scheme Implementation Deed (“SID”) on 30 September 2025, as amended on 9 November 2025, under which they agreed to implement the scheme subject to the satisfaction, or waiver, of various conditions precedent. The proposed scheme would effect a merger between Seven and Southern Cross, by the acquisition of all of Seven’s ordinary shares by Southern Cross, with the result that Seven shareholders and Southern Cross shareholders would respectively hold 49.9% and 50.1% of the combined group.

Under the proposed scheme, Seven shareholders would generally receive scrip consideration of 0.1552 Southern Cross fully paid ordinary shares for each fully paid ordinary Seven share held on the record date. However, certain Seven shareholders with registered addresses outside Australia and its external territories, the United Kingdom, Hong Kong, Italy and New Zealand (“Ineligible Foreign Shareholders”) would not be eligible to receive the scheme consideration and would receive the proceeds of sale of the Southern Cross shares to which they would otherwise have been entitled as scheme consideration, less transaction costs. Any Seven shareholder who would be entitled to receive less than a Marketable Parcel (as defined) as scheme consideration (“Small Holdings Shareholder”) will likewise receive the proceeds of sale of the Southern Cross Shares to which they would otherwise have been entitled, unless that shareholder made a positive election to receive Southern Cross shares. The right to make that election is drawn to such shareholders’ attention in the scheme booklet.

I made the orders sought by Seven at the conclusion of the hearing on 31 October 2025. These are my reasons for doing so. I have drawn on the helpful submissions of Mr Williams and Mr Gerber, who appear for Seven in this judgment.

Seven reads several affidavits in support of the application. By his affidavit dated 10 October 2025, Mr Luke Hastings, a solicitor acting for Seven, refers to the announcement of the proposed scheme to ASX and annexes a company search for Seven.

By her affidavit dated 10 November 2025, Ms Emma McDonald, who is Seven’s general counsel, addresses Seven’s business and capital structure; the verification of the information related to Seven in the proposed scheme booklet; the provision of the draft scheme booklet to the Australian Securities & Investments Commission (“ASIC”); the consents to act as chair or alternate chairperson of the proposed scheme meeting given by Mr Kerry Stokes AC and Mr Ryan Stokes; the reimbursement or “break” fee contemplated by the SID as a percentage of Seven’s equity value; the proposed treatment of Seven Performance Rights and Share Rights (as defined) of the scheme becomes effective; and the proposed manner of dispatch of materials to Seven shareholders and other communications in relation to the scheme.

By her affidavit dated 11 November 2025, Ms Sarah Tinsley, who is the chief legal officer and company secretary of Southern Cross, addressed the verification of statements of intention attributable to the Southern Cross board and other information related to Southern Cross in the proposed scheme booklet and the execution of a deed poll in common form by Southern Cross.

Seven also tendered a letter dated 11 November 2025 from the Australian Securities & Investments Commission in common form, which reserved its position as to s 411(17)(b) of the Act; indicated that it considered that it had had a reasonable opportunity to examine the terms of the scheme and draft explanatory statement and to make submissions to the Court; and indicated that it did not propose to appear to make submissions or to oppose the scheme at the first Court hearing.

Mr Willams submits that the principles governing an application for orders to convene a meeting of members under s 411(1) of the Act are well settled: Re InvoCare Ltd [2023] NSWSC 1180 at [14] (“InvoCare”). It is well-established that the Court’s role at a first Court hearing in respect of a scheme is primarily to determine, in the exercise of its discretion, whether to convene a scheme meeting and approve the explanatory statement if it is satisfied of several matters, namely that the plaintiff is a “Part 5.1 body”; the proposed scheme is an “arrangement” within the meaning of s 411 of the Act; there has been proper disclosure to members (or creditors if a creditors’ scheme); the scheme is bona fide and properly proposed; ASIC has had reasonable opportunity to examine the proposed scheme and explanatory statement, to make submissions and has had 14 days’ notice of the proposed hearing date of the first Court hearing; the procedural requirements of the Supreme Court (Corporations) Rules 1999 (NSW) (“Rules”) have been met; and there is no apparent reason why the scheme should not, in due course, receive the Court’s approval if the necessary majority of votes is achieved: Re Ellerston Global Investments Ltd [2020] NSWSC 879 at [25]–[26]; Re Vocus Group Ltd [2021] NSWSC 630 at [12]; InvoCare at [16]; Re Pacific Smiles Group Ltd [2024] NSWSC 812 at [9]; Re APM Human Services International Ltd [2024] NSWSC 1095 at [11].

In Re Absolute Equity Performance Fund Ltd [2022] FCA 933, Halley J observed at [19]–[22] that:

Each of the preconditions to the exercise of s 411(1) of the Act is met here. Seven is registered under the Act and is a Part 5.1 body and the proposed scheme is an “arrangement” between Seven and its shareholders. The draft scheme booklet has been the subject of a verification process. The procedural requirements under the Rules have been met, on the basis that I will dispense with r 3.4 of the Rules where Seven proposes to give notice of the second Court hearing by way of ASX announcement in accordance with common practice.

Where the preconditions to the exercise of power under s 411(1) of the Act are satisfied, then it is necessary for the Court to consider whether the Court should, in its discretion, exercise its power under s 411(1) of the Act. Mr Williams submits that the principles which apply to the exercise of the Court’s discretion are also well understood and that the Court must be satisfied that the scheme is fit for consideration by the proposed scheme meeting in the sense that it is of such a nature and cast in such terms that, if it achieves the statutory majorities at the meeting, the Court would be likely to approve it on the hearing of a petition which is unopposed; and that members are properly informed as to the nature of the scheme before the scheme meeting: Re Villa World Ltd [2019] NSWSC 1207 at [15]–[19] (“Villa World”).

Here, Seven’s directors unanimously recommend that Seven shareholders vote in favour of the scheme, in the absence of a superior proposal, and subject to the independent expert continuing to conclude that the scheme is in the best interests of Seven shareholders. Subject to the same qualifications, each of Seven’s directors intends to vote, or procure the voting of, all Seven shares held or controlled by them in favour of the scheme. I note, for completeness, that Mr Kerry Stokes AC, who is the chair of the Seven board, has a relevant interest in approximately 40.43% of the Seven shares on issue, valued at approximately $87,115,823.76 based on the closing price of Seven shares on 29 September 2025, being the last trading day before the announcement of the scheme. Mr Stokes AC also has a relevant interest in 700,000 Southern Cross Shares, valued at approximately $609,000 based on the closing price of Southern Cross Shares on 29 September 2025. Mr Williams submits, and I accept, that Mr Stokes AC’s modest relevant interest in Southern Cross shares, relative to his relevant interest in Seven shares, which is disclosed in the scheme booklet, is not a matter which would prevent him from making a recommendation to Seven shareholders in relation to the scheme.

Seven has obtained a report from Lonergan Edwards & Associates Ltd (“Lonergan Edwards”) as to whether, in the expert’s opinion, the scheme is in the best interests of Seven’s shareholders. Lonergan Edwards express the view that the merger terms are fair, since the collective interest that Seven’s shareholders will acquire in the merged group is consistent with the relative value that those shareholders will be contributing to the merged group. Lonergan Edwards also express the view that Seven’s shareholders are likely to be better off if the scheme proceeds as their assessed value of the scheme consideration exceeds its assessment of the underlying value of a minority interest in Seven shares on a standalone basis, primarily because of cost synergies expected to arise from the merger. On that basis, Lonergan Edwards concludes that the scheme is in the best interests of Seven Shareholders in the absence of a superior proposal.

Subject to the particular matters addressed below, I am satisfied that there is nothing in the terms of the scheme or in its effect on scheme shareholders that would warrant the Court declining to approve the scheme at the second Court hearing, if it receives the statutory majorities required by s 411(4)(a)(ii) of the Act at the scheme meeting.

Mr Williams draws several particular aspects of the scheme to the Court’s attention.

First, he notes that a condition precedent to the scheme is the issue of a report by an Independent Expert appointed by Southern Cross which concludes that the scheme is in the best interests of Southern Cross shareholders, although there is no legislative or regulatory requirement for such a report. Southern Cross has obtained a report from Kroll Australia Pty Ltd, which was released to ASX on 4 November 2025. That report expresses the view that Southern Cross shareholders should benefit from an increase in the underlying value of their shares following implementation of the proposed scheme, inclusive of the value of any synergies derived from the combined business, and that the scheme is in the best interests of Southern Cross shareholders in the absence of a superior proposal.

Second, Mr Williams notes that the SID contains exclusivity provisions that operate for the benefit of both Seven and Southern Cross. The Court is concerned to ensure that any exclusivity period should be for no more than a reasonable period, capable of precise ascertainment; an exclusivity clause directed at dealing with an unsolicited alternative proposal should generally be subject to a fiduciary carve out; and the provisions should be clearly disclosed in the explanatory statement sent to shareholders: Re Arthur Yates & Co Ltd (2001) 36 ACSR 758; [2001] NSWSC 40 at [9]; Re TPG Telecom Ltd [2020] NSWSC 772 at [22]; Re Isentia Group Ltd [2021] NSWSC 910 at [23]; Re Asaleo Care Ltd [2021] FCA 406 at [55].

Both Seven and Southern Cross are subject to ‘no shop’ and ‘no talk’ exclusivity provisions under cl 12 of the SID and to ‘notification’ and ‘matching right’ provisions under cll 12.3-12.5 of the SID. Mr Williams rightly draws attention to the fact that the fiduciary carve-out to the ‘no shop’ and ‘no talk’ provisions operate differently as between Seven and Southern Cross. The fiduciary carve-out applicable to Seven under cl 12.2(a) of the SID is in common form. The fiduciary carve-out to the ‘no shop’ and ‘no talk’ obligations on Southern Cross is more limited and applies (at the risk of some over-simplification of a complex provisions) only until the earlier of two weeks after registration of the scheme booklet with ASIC and four weeks after the issue of the independent expert report obtained by Southern Cross. It is expected this period will expire on or around 26 November 2025. I accept this matter does not provide reason not to convene the scheme meeting, where there is no reason to think that Seven and Southern Cross could not properly have negotiated and entered the SID on these terms and these matters are clearly disclosed in the scheme booklet. The duration of the Exclusivity Period is here nine months from the date of the SID and I accept that is not an unreasonable period for a substantial transaction which requires regulatory approvals.

Third, Mr Williams addresses the position as to Ineligible Foreign Shareholders and Small Holdings Shareholders, which I noted above. Seven shareholders with registered addresses outside Australia and other specified jurisdictions will be Ineligible Foreign Shareholders unless Seven and Southern Cross determine that it is lawful and not unduly onerous or impracticable to issue the relevant Seven shareholders with Southern Cross shares when this scheme becomes effective. This provision is in common form and I accept that Ineligible Foreign Shareholders do not constitute a separate class at the scheme meeting: Re Hills Motorway Ltd [2002] 43 ACSR 101 at 104; [2002] NSWSC 897; Re Cirrus Networks Holdings Ltd [2023] NSWSC 1298 at [22]. I have noted the treatment of Small Holdings Shareholders above and noted that shareholders who would otherwise fall within that description may elect to receive Southern Cross shares if they wish. I accept that such shareholders who do not make such an election also do not constitute a separate class at the scheme meeting.

Fourth, Mr Williams addresses the position as to Seven Equity Incentives, as defined. Section 5.11 of the proposed scheme booklet describes various incentive plans under which directors, senior executives and key employees of Seven are offered Performance Rights or Share Rights (“Seven Equity Incentives”) which, subject to satisfaction of certain conditions, will, if vested, allow participants to receive fully ordinary paid shares in Seven. The SID requires that there must be no Seven Equity Incentives in existence on the Business Day prior to 30 December 2025. Seven plans to bring about that position by the partial vesting of outstanding performance rights issued under Seven’s Long-Term Incentive Plan, with the balance to lapse and the vesting of the share rights issued under the Non-Executive Director Share Plan, and Seven shares issued on vesting, will be acquired under the scheme. Mr Williams submits, and I accept, that holders of performance or similar rights to receive Seven shares who are also Seven shareholders are not in a separate class of members by reason only that they also hold such rights: Re Foster’s Group Ltd (No 2) [2011] VSC 547 at [38]–[43]; Re Cashcard Australia Ltd (2004) 48 ACSR 738; [2004] FCA 223. Mr Williams also points out that Seven’s Managing Director and Chief Executive, Mr Howard, holds Seven Equity Incentives which will be treated in this manner. I accept that Mr Howard’s receipt of that benefit does not prevent his making a recommendation in respect of the scheme where that matter is here sufficiently disclosed to shareholders in the scheme booklet: Re Kidman Resources Ltd (2019) 139 ACSR 122; [2019] FCA 1226 at [115]; Re DWS Ltd (2020) 148 ACSR 616; [2020] FCA 1590 at [41]–[49]; Re Oz Minerals Ltd [2023] FCA 197 at [10], [18].

Fifth, Mr Williams points out that, under cl 13 of the SID, a break fee of $2,154,796 may be payable by Seven to Southern Cross or by Southern Cross to Seven in specified circumstances. That fee would be payable by Seven in customary circumstances, namely change in recommendation, completion of a competing proposal within nine months of its announcement or termination of the SID for Seven’s material breach, and is not payable merely because the scheme is not approved by the required majorities. That fee would be payable by Southern Cross if it exercises its right to terminate the SID to pursue a superior proposal following the matching right process or completes a competing proposal within nine months of its announcement, or upon termination of the SID for Southern Cross’ material breach. That fee represents approximately 1% of the equity value of Seven of approximately $215.5 million as at 29 September 2025, being the last trading day before the announcement of the scheme, which accords with the Australian Takeovers Panel’s guidance. I accept that break fees of this kind are common features in schemes of arrangement and will be permitted where the amount of the break fee is not such that it could influence voting at the meeting to be convened and there are no other unusual circumstances: Villa World at [24]. This matter does not give rise to any reason not to convene the scheme meeting.

Sixth, Mr Williams outlines the manner of the dispatch of scheme materials to Seven shareholders which raised no novel issues.

Seventh, Mr Williams notes that, following dispatch of the scheme booklet, a third party provider will operate a scheme meeting website and inbound shareholder information line, through which Seven shareholders can ask questions about the scheme or disclosures in the scheme booklet. Seven has also engaged another third party provider to undertake phone calls to the largest retail Seven shareholders and drafts of the respective communications are in evidence. Mr Williams submits that the proposed inbound and outbound shareholder communications do not travel beyond the information in the scheme booklet and present information in a balanced manner. Consistent with common practice, Seven does not seek orders approving those communications and there is nothing that I need raise in respect of them.

For these reasons, I made the orders sought by Seven at the conclusion of the first Court hearing on 12 November 2025.