Kerry Stokes proposed $3 billion merger of the Seven Network Ltd
(ASX:SEV) and mining equipment company WesTrac has suffered a blow after shareholders were advised to reject the deal.
According to a report in The Australian, corporate governance advisers RiskMetrics and CGI Glass Lewis have advised their institutional clients to vote against the merger at a shareholders meeting on April 20, finding sufficient governance and valuation concerns to make the recommendation.
However, the paper says key investors Ausbil Dexia and Perennial Investment Partners who own 12% of Seven, are unlikely to be influenced that easily.
Although Ausbil is yet to make known its intentions, The Australian reports CEO Paul Xiradis saying that at the end of the day it will make up its own mind.
The paper reports RiskMetrics concerns that the current transaction does not appear compelling from a valuation perspective for minority shareholders given the risks associated with the transaction.
Stokes is confident the deal will go through with a Seven representative saying that shareholders understand the many benefits of being leveraged to the commodity boom Australia is now experiencing.
Seven Network posted a profit for the year to June 30, 2009.
