The Southern Cross Media Group Ltd (ASX: SXL) share price is having a stellar day on Tuesday.
In morning trade, the ASX All Ords share was up as much as 30% to 98.5 cents.
The media company's shares have pulled back a touch since then but remain up over 21% to 92.5 cents.
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Why is this ASX All Ords share rocketing?
Investors have been buying Southern Cross Media shares after the company revealed that one of its rivals has acquired a substantial stake.
According to the release, KIIS FM's owner ARN Media (ASX: A1N) has acquired an interest of 14.8% in Southern Cross Media for $38.3 million. This is close to the maximum shareholding that ARN Media, formerly known as HT&E, is allowed.
The release notes that under the Broadcasting Services Act 1992 (Cth) (BSA), ARN Media would be deemed to control Southern Cross Media's commercial radio and television broadcasting licences if it were to hold an interest of 15%.
However, because Southern Cross Media and ARN Media control the maximum permitted two commercial radio broadcasting licences in all metropolitan markets and several regional markets, the BSA prohibits ARN Media from holding an interest of 15% or more in Southern Cross Media.
Why has it acquired the stake?
ARN Media has only provided a small statement regarding this investment. It said:
ARN Media acquired the stake as a strategic equity investment in a sector that it knows well and sees the equity position in Southern Cross Media as representing attractive value for ARN Media's shareholders.
It appears that some investors agree with this view and have been piling into the ASX All Ords share today. They may also be anticipating a full takeover in the future. Time will tell if that is the case, but ARN Media certainly has its foot in the door.
