Seven Group Holdings

"‘Shock and awe’ is how one commentator described the announcement made by the Seven Network in February 2010.16 In theory the board of the company had, ever since the Kohlberg Kravis Roberts deal, been searching the world for good investments. Instead, much of the money had been used to buy back shares in the company itself, which had increased Stokes’ control. More had been spent on Consolidated Media Holdings and West Australian Newspapers. Now, the company announced, it had decided that the best way to spend its cash was to buy WesTrac from Stokes’ private company, ACE. Under the deal the Seven Network would pay $1 billion in shares for WesTrac, and take on the company’s $1 billion in debt, using $600 million of the remaining cash in the company to pay it down. The new merged company, Seven Group Holdings, would own the Seven Media Group with Kohlberg Kravis Roberts. It would be a conglomerate, bearing the Seven name but with little to do with the original business. Stokes would own 68 per cent of it. Once again, the equity moved closer to Stokes, and the debt – accrued by WesTrac during its fast expansion in New South Wales and China – further away. One investment adviser service described the situation pithily. ‘So after three years of searching high and low, the directors [of the Seven Network] have come to the conclusion that the very best investment opportunity is the acquisition of WesTrac.’ Under the heading ‘Sarcastic Remark Warning’, the service’s newsletter said, ‘The new combined media investment and heavy earthmoving company will be renamed Seven Group Holdings Limited, presumably a reference to the seven seas sailed by independent directors in their search for investment opportunities before stumbling onto the perfect one in their boss’s backyard.’"

"In one of Stokes’s long-range chess moves, he put former Woodside Petroleum chief Don Voelte in the media-group chair — where he took a chainsaw to costs — ready for Worner to take over the big job in 2013. Although Stokes sees Voelte as a tough all-round manager, his ultimate value lies in his knowledge of the energy business, which explains why the American became head of Stokes’s Seven Group Holdings with a brief to examine gas extraction."

"In 2010 Stokes merged Seven Network Limited and WesTrac to form Seven Group Holdings, a transaction that made the previously private WesTrac Group public. The corporate union of television and bulldozers seemed as unlikely a mix as machine oil and Evian water but Stokes argued, successfully, that everyone would ultimately benefit. The deal set up an even more ambitious plot twist the following year."