Daily Brief Australia: Seven West Media, Domino’s Pizza Enterprises, Premier Investments and more

• Television broadcaster and publisher Seven West Media (SWM AU) has entered into a Scheme with radio network play Southern Cross Media (SXL AU).
• SXL will issue 0.1552 new shares for every SWM. Should the Scheme get up, SXL will hold 50.1% of the combined entity and SWM the remainder.
• Kerry Stokes backed SGH Limited (SGH AU) will hold ~20% in the merged entity. But not all shareholders are on board with the Offer. Trading through terms.

• Seven West Media (SWM AU) will merge with Southern Cross Media (SXL AU) at a ratio of 0.1552 SXL shares per SWM share. 
• The merger is strategically sensible and is expected to deliver annualised cost synergies of A$25 to A$35 million. The merger requires approval from both the ACMA and the ACCC.
• While the offer is light compared to historical exchange ratios and peer multiples, large SWM shareholders are supportive. The scheme vote risk is low. 

• Domino’s Pizza Enterprises is navigating a challenging period marked by declining profitability and significant management transitions, despite maintaining relatively stable revenue. The company’s long-term growth trajectory has stalled, as evidenced by negative compound annual growth rates in key metrics like net income and EPS over the past 3, 5, and 10 years.
• The company is undertaking a strategic reset focused on improving franchisee profitability, particularly in underperforming markets like Japan and France, which involves store closures and operational restructuring. Future growth hinges on the success of these turnaround efforts and a return to sustainable organic store expansion.
• Intense competition from other major pizza chains, local operators, and third-party delivery aggregators, coupled with inflationary pressures on food and labor costs, remains a primary risk. The company’s ability to leverage its brand, scale, and technology will be critical to defending its market position and restoring margin health.

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• Premier Investments’ Peter Alexander Brand is firing domestically and is just getting going in the UK.
• Smiggle has struggled, but analysts see a turnaround ahead.
• -Premier Investments’ FY25 sees Peter Alexander outperform and Smiggle underperform -Margins reduced due to expansion and start-up costs -Consumer environment improving for Smiggle -FY26 turnaround thesis suggests shares are cheaply priced