Ooh Media and Adshel deal will lead to $18m in cuts and disposal of the Adshel brand

Ooh Media has confirmed its acquisition of street furniture business Adshel for $570 million, which will lead to “cost synergies” of between $15 million to $18 million from “leveraging combined infrastructure with duplicated resource rationalisation and reducing outsourcing costs”.

The deal is also contingent on Ooh Media ceasing to use the Adshel brand within three months of the acquisition.

The Adshel brand will be no more once it is owned by Ooh Media

Ooh Media said the deal is expected to be completed this year, but noted it remains subject to approval from the ACCC – which last year scuppered an attempted merger between Ooh Media and APN Outdoor.

Mumbrella understands APN Outdoor is attempting to get a deal across the line this morning which would see it acquired by Adshel’s main rival in the street furniture space, French-owned company JC Decaux.

APN Outdoor has entered a trading halt this morning, pending a further announcement from the company.

Ooh media’s acquisition of Adshel will be funded with a combination of new debt and an equity capital raising.

The new debt facilities to fund the acquisition have a limit of $450 million.

The company will also partially fund the acquisition via equity raising, and is looking to raise $329.9m at a price of $4.60 per new share.

Ooh Media said the acquisition implies an EV/EBITDA (enterprise value/earnings before interest, tax, depreciation and amortisation) multiple of 11.6 pre-synergies, which post-synergies becomes 8.7.

Ooh Media CEO Brendon Cook said he was confident shareholders will “enjoy the benefits” which manifest from the cost synergies between itself and Adshel.

“Ooh Media has a history of developing a diverse product portfolio to offer advertisers a range of audiences. Adshel is complementary to our existing portfolio and we are excited to be entering the new segments of street furniture and rail. The digitisation opportunity in the Adshel business is expected to provide a significant avenue for further growth beyond what has been achieved to date. We are confident that Ooh shareholders will enjoy the benefit of cost synergies arising from the acquisition,” he said.

Adshel is currently owned by HT&E – formerly APN News & Media. HT&E retains its radio assets in the form of Australian Radio Network (ARN), which includes stations such as Kiis, Gold FM and WS FM. It also owns digital publisher Conversant Media and content marketing business Emotive.

The outdoor business had a portfolio of 21,000-plus poster faces and over 800 screens across Australia and New Zealand.

Timeline of the outdoor industry’s almost-mergers

Ooh Media’s successful bid for Adshel comes after a busy 18 months for the out-of-home industry, with proposed mergers flying in every direction.

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 until now owned 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 occurred.

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.

APN Outdoor then continued to up its offer, bidding $540 million for Adshel late last week, however was ultimately unsuccessful against Ooh Media.

APN Outdoor entered a trading halt this morning, pending a further announcement from the company – which is expected to be its deal with JC Decaux.

JC Decaux had previously told Mumbrella that it wouldn’t pursue any acquisitions until it had re-secured the lucrative City of Sydney contract, which was put up for grabs late last year after two decades with JC Decaux.

Mumbrella understands the outcome of the battle for the City of Sydney contract is not yet known, but many anticipate it will be awarded to either Adshel or JC Decaux.


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

Sign up to the free Mumbrella newsletter now.



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