The independent board committee said the offer represents “attractive acquisition multiple,” at 10.2 times earnings before interest, tax, depreciation and amortisation.
“If the offer is not accepted, the [Macquarie] share price is likely to fall further,” the PwC report warns. No alternative proposals to buy the remaining shares have been received by the board.
“We cannot exclude the prospect of an alternative proposal or offer on better terms emerging,” the report says, but added that any alternative offer was unlikely to be successful “given the current controlling equity interest held by Nine would deter other bidders”.
This comes as Macquarie faces financial pressure from a lengthy advertising boycott against star 2GB host Alan Jones. Macquarie chairman Russell Tate sent advertisers a letter on Friday promising a “full review” of the content on the 4BC and 2GB Breakfast Show.
About 100 brands have now distanced themselves from the radio business, with more than $1 million in revenue impacted by the boycott. A $3 million hit to earnings (before interest, tax, depreciation and amortisation) on an ongoing basis that could affect Nine’s offer under the terms of the bid.
Outspoken fund manager Wilson Asset Management’s Geoff Wilson has been arguing against the Nine offer, saying it undervalues Macquarie with shares trading at $1.71 ahead of the bid.“We’re in the process of reading through the target statement but what doesn’t change is that it’s an opportunistic bid when Macquarie Media has had a depressed earnings period,” Mr Wilson said.
“It appears that the report significantly underestimates the synergies. The company has the ability to pay a $30 million fully franked dividend to be shared among all shareholders on a pro rata basis but Nine seems to be intent in stealing that from the Macquarie shareholders.”