News

JC Decaux offers to buy APN Outdoor for $1.1 billion

The will-they won’t-they takeover game between out-of-home advertising companies operating in Australia continues, with French-based outfit JC Decaux submitting a non-binding proposal to acquire 100% of APN Outdoor for $1.1 billion.

The proposal comes as the outdoor industry looks to consolidate, with a merger between two of the biggest local players – APN Outdoor and Ooh Media – being rejected last year by the competition watchdog, and both companies subsequently bidding for Here There & Everywhere’s street furniture business Adshel.

The proposal is subject to due diligence and regulatory approval

JC Decaux describes itself as the number one outdoor advertising company worldwide. It entered the Australian market in 1997 with the street furniture contract for Sydney ahead of the Olympic Games in 2000. It has held the account for the 20 years since.

The lucrative City of Sydney contract, however, was put up for grabs late last year,  with JC Decaux chairman and co-CEO Jean Francois Decaux telling Mumbrella it would focus on winning the account before it made any acquisitions.

Steve O’Connor, CEO of JC Decaux’s Australian operation and also chairman of the Outdoor Media Association (OMA), reaffirmed the position at the time.

“We have to win Sydney – number one. And we have to bed down these contracts we’ve just won [Yarra Trams and Telstra]. For the foreseeable future, our focus is going to be on what we’ve got – which is very significant,” he said.

Despite apparent uncertainty around the winner of the City of Sydney contract, JC Decaux announced its indicative and non-binding intentions with APN Outdoor this evening.

“APN Outdoor Group Limited is a leading out-of-home media company in Australia that primarily operates in the large-format billboard segment, as well as in the transit, rail and airport segments,” JC Decaux’s statement said.

“APN Outdoor would be complementary to JC Decaux’s existing out-of-home media assets in Australia, which are primarily street furniture segment. JC Decaux is one of the leading street furniture players in the Australian market, having recently won the advertising rights for Yarra Trams in Melbourne and Telstra under long-term contracts.”

O’Connor has told Mumbrella JC Decaux is ‘here to stay’ in Australia

The proposal is for 100% of APN Outdoor’s share capital based on its current business assets, via a scheme of agreement, for $6.52 per share in cash – which it says is a 30.0% premium over the six months VWAP [volume weighted average price] and corresponds to approximately $1.1 billion.

JC Decaux noted the proposal is subject to due diligence, applicable regulatory approvals (including the Australian Competition and Consumer Commission – which blocked the APN Outdoor and Ooh Media merger – and the Foreign Investment Review Board) and other customary conditions.

“The proposal is also conditional on entry into a definitive scheme implementation agreement between JC Decaux and APN Outdoor, under which APN Outdoor would puts to its shareholders the contemplated scheme to implement the proposal,” a release from JC Decaux explained.

The company noted no agreement has been reached between the two parties and there is no certainty it will result in any transaction.

Goldman Sachs is acting as JC Decaux’s financial adviser for the proposal.

Timeline of the outdoor industry’s almost-mergers

It’s been a busy 18 months for the out-of-home industry, with proposed mergers flying in every direction, but none yet getting off the ground.

In late December 2016, APN Outdoor and Ooh Media – Australia’s two largest out-of-home advertising companies – announced their intentions to merge.

At the time, the companies explained the motivation behind the decision was to create a “long-term and diversified asset base across classic, digital and online formats”.

The announcement came six months after Ooh media had bought 85% of youth-orientated publisher Junkee Media for $11.05m.

Despite Ooh Media CEO Brendon Cook’s confidence the merger would be approved – based on the belief that the outdoor market makes up just 2.5% of media spend and thus the consolidation would not represent a significant decline in overall market competition – the merger was ultimately cancelled in May last year after the Australian Competition and Consumer Commission indicated it would intervene on competition grounds.

The boss of the ACCC, Rod Simms, then hit out at Cook, claiming he had failed to understand the concerns of the outdoor company’s clients in light of the merger proposal.

“We had tremendous feedback from his customers and the customers of APN about their concerns about the merger. So it wasn’t just our view there’s not strong substitutability between outdoor media and other media sections, it was also the view of many customers and we could not see evidence that there was strong substitutability between, say, advertising out-of-home and advertising on Facebook.”

Around the same time, APN News & Media – which owns outdoor street furniture company Adshel as well as digital publisher Conversant Media and radio company Australian Radio Network (ARN) – decided to clear up market confusion and rebranded to Here There & Everywhere, or HT&E.

APN News & Media once also owned APN Outdoor, but it sold 100% of its shares in 2013. The cross-over in names continued to confuse the market until the rebrand occured.

With HT&E rebranded, and the Ooh Media and APN Outdoor merger scuppered by the watchdog, new potential partnerships emerged.

In April of this year, HT&E (formerly APN News & Media) revealed it had rejected a bid from Ooh Media to buy Adshel. The proposed bid’s value was not disclosed.

Weeks later, however, Ooh Media upped the bid to nearly half a billion dollars.

HT&E then revealed Ooh Media was not the only bidder at the table for Adshel.

That night, it became clear APN Outdoor was the other bidder, upping Ooh Media’s $470 million offer for Adshel to $500 million, in the first major move from newly-installed CEO James Warbuton.

Mumbrella understands the future of Adshel’s ownership, and the results of the City of Sydney tender, remain up in the air – but the games seem set to continue.

ADVERTISEMENT

Get the latest media and marketing industry news (and views) direct to your inbox.

Sign up to the free Mumbrella newsletter now.

 

SUBSCRIBE

Sign up to our free daily update to get the latest in media and marketing.