Shares in Australia's Seven West Media jump on privatisation talk

MELBOURNE, Oct 8 (Reuters) - Shares in Seven West Media Ltd, owner of Australia's top-rated free-to-air televisionnetworks, surged by more than six percent on Monday onspeculation of a buyout by its largest shareholder.

Seven West's shares have slumped 57 percent this year,faring worse than its listed peer Ten Network Holdings ,which is down 47 percent, as advertising revenues have collapsedacross the media sector, hitting profits.

Seven West Media went public last year through a merger withWest Australian Newspapers. The group is 33 percent owned bySeven Group Holdings , controlled by magnate KerryStokes.

RBS analysts said in a research note that Seven GroupHoldings could acquire the 67 percent of Seven West Media itdoes not already own at A$1.50 per share or about A$1 billion($1.01 billion), most likely with a partner.

"We believe a joint privatisation (potentially with KKR) ismore feasible," said RBS analyst Matthew Nicholas, referring toprivate equity firm KKR & Co which owns 6.9 percent ofSeven West Media after selling down its stake last year.

Nicholas said an acquisition would make sense with the mediasector close to the bottom of the advertising cycle, Seven WestMedia trading at a depressed multiple of 6.7 times forwardearnings, and a desire for Seven Group to diversify away frommining services given the cooling of the mining boom.

Shares in Seven West jumped 6.5 percent to A$1.305 on activeturnover, while Seven Group shares gained 2.5 percent toA$47.38.

In addition to the Seven Television network, Seven West alsoowns The West Australian newspaper, 50 percent of web siteYahoo!7, and the country's second-largest magazine group,Pacific Magazines.

Australia's second-rated network, privately owned NineEntertainment Co Pty Ltd [CVC.UL} which owns top-rated TVnetwork Channel Nine appears likely to fall into the hands ofthe lenders it owes A$2.7 billion, including Apollo GlobalManagement and Oaktree Capital Group .

(Reporting by Victoria Thieberger; Editing by Eric Meijer)

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