Merger with Westrac good in long term

Published in Daily Advertiser, April 2010

The proposed merger between Kerry Stokes chaired Seven Network Ltd and his fellow related entity WesTrac Holdings Pty Ltd should deliver good returns to shareholders in the long run, an analyst says.

The media group surprised the market in February when it announced the deal with Perth-based Caterpillar products dealer WesTrac, which is owned by Mr Stokes' private holding company Australian Capital Equity.

Seven Network shareholders will vote on the proposed scheme of arrangement at a meeting in Sydney on April 20.

The fate of the planned tie-up rests in the hands of minority shareholders because Mr Stokes, who holds 48.7 per cent of Seven Network shares, cannot vote on the related-party transaction.

If approved by Seven Network shareholders, ACE will own 68 per cent of the merged entity.

Wealth Within Ltd investment analyst Janine Cox says the tie-up is a sound diversification strategy.