Those familiar with Mr Catalano’s strategy said that if the scheme fails to succeed, he will push for an extraordinary general meeting to instigate a board spill and secure the appointment of a representative director.
The former Domain Group boss has repeatedly said he wants better terms from Seven to surrender his shareholding. He has raised concerns about the terms of the deal directly with Seven chief executive James Warburton in recent weeks, sources said. Despite this, Seven sources said the network did not anticipate raising its offer.
Mr Catalano has also encouraged Prime to walk away from the merger, which would result in Prime incurring a $600,000 ‘break fee’.
Prime chairman John Hartigan said in a statement that he would “deal with the realities before any other scenarios”.
The regional broadcaster has engaged advisory firm Morrow Sodali to help drum up support from shareholders ahead of the December 19 vote, with Mr Hartigan spending this week in Melbourne meeting with investors.
Bermuda-based Mr Gordon has not publicly indicated whether he intends to vote in favour of the deal. Mr Hartigan has been upbeat about support from Mr Gordon, who is the owner of Prime’s rival WIN TV. But sources close to Mr Gordon have been more circumspect about his likely position.
Big shareholder Spheria Asset Management, which has a 14.4 per cent stake, indicated support for the deal within hours of it being revealed in October.
Mr Catalano previously attempted to derail the merger between Fairfax Media and Nine Entertainment Co but ultimately failed.
Sources familiar with the merger discussions believe Seven can achieve up to $20 million in synergies within 18 months, compared to the minimum $11 million amount disclosed to the market.
Independent expert Lonergan Edwards & Associates assessed the deal as “not fair but is reasonable to, and in the best interests of, Prime shareholders in the absence of a super proposal”. The firm valued Prime shares at 21¢ to 24¢ while the deal values the shares at 18.3¢ to 20.6¢. Shareholders get 0.4582 shares in Seven for each Prime share under the terms.
The independent assessors’ report in November said there was “some possibility that WA Chess Investments will put forward an alternative proposal for or in connection with Prime prior to the Scheme meeting”. Sources close to Mr Catalano did not consider a rival superior proposal a likely outcome.
Since taking control of ACM in July, Mr Catalano has expressed plans to turn the regional newspaper business into a cross-platform media company with interests in broadcast and digital, including through a tie-up with Seven and Prime.
Mr Catalano was in Pyrmont last week at the offices of Nine Entertainment Co, owner of The Sydney Morning Herald and The Age, discussing a printing deal.
Jennifer Duke is a media and telecommunications journalist for The Sydney Morning Herald and The Age.