QMS Media to be acquired by Quadrant Private Equity
QMS Media is likely to end up in the hands of private equity, with the outdoor company announcing it has entered into a Scheme Implementation Deed (SID) with Quadrant Private Equity and its institutional partners.
The deal will round out a busy few years in the out-of-home sector, with Ooh Media buying street furniture business Adshel from Here, There and Everywhere (HT&E), and international giant JC Decaux purchasing APN Outdoor.
This deal would see Quadrant acquire 100% of QMS in an all-cash offer of $1.22 per share. The deal values QMS’ equity at $420.6m, with an enterprise value of $571.6m, implying an EV/CY 19 EBITDA (earnings before interest, tax, depreciation and amortisation) of 9.4x.
QMS’ board has unanimously recommended the scheme, in the absence of a better deal, but it remains subject to certain conditions including approval from shareholders, the Federal Court of Australia, the Australian Securities and Investments Commission (ASIC), the Australian Foreign Investment Review Board (FIRB), the Australian Securities Exchange (ASX) and the New Zealand Overseas Investment Office (OIO).
QMS Media chairman, Wayne Stevenson, said the offer from Quadrant was unsolicited, but the group had considered a range of alternatives.
“Having fully considered a range of strategic alternatives in relation to some of all parts of the QMS business, including the receipt of an unsolicited proposal from Quadrant, the Board believes this offer allows QMS shareholders to realise significant value for their shares,” he said. “Since QMS Media’s initial public offering in 2015, QMS Media has delivered significant shareholder value, as illustrated by the increase from its IPO price of $0.65 to the Scheme Consideration of $1.22.”
QMS Media’s CEO, Barclay Nettlefold, added: “The recommended acquisition of QMS by Quadrant represents an excellent outcome for our shareholders, partners and employees. It is a testament to our sustained growth in a challenging market, and our continued market-leading digital revenue contribution, led by our strong and experienced executive management team.”
Quadrant Private Equity’s Jonathon Pearce implied Nettlefold would retain his spot as CEO under the new regime, with the private equity firm to back QMS’ ongoing growth.
“We are delighted to have an opportunity to partner with Barclay and his experienced team,” he said. “QMS has a proven track record of delivering sustainable growth. Under Barclay’s continued leadership and with Quadrant providing additional capital, we believe the business will continue to grow and deliver innovative market-leading solutions to customers across the Australia and New Zealand Media and Global Sports divisions.”
QMS shareholders do not need to take any action as yet, but will have the opportunity to vote on the scheme at court-convened shareholder meetings.
Should all approvals be granted, the deal should be implemented in the first quarter of the 2020 calendar year.
Moves and mergers in Australia’s outdoor sector
If QMS does change hands, it will round out a busy few years for outdoor, with mergers, both proposed and successful, flying in every direction.
In late December 2016, APN Outdoor and Ooh Media – Australia’s two largest out-of-home advertising companies at the time – 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 2017 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 Ooh’s Cook, claiming he had failed to understand the concerns of the outdoor companies’ 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 at the time also 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.
With HT&E rebranded, and the Ooh Media and APN Outdoor merger scuppered by the watchdog, new potential partnerships emerged.
In April last 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 $470m offer for Adshel to $500m, in the first major move from newly-installed CEO James Warbuton.
APN Outdoor then continued to up its offer, bidding $540m for Adshel, however was ultimately unsuccessful against Ooh Media.
Ooh Media ultimately bought Adshel for $570m.
The Adshel brand is no more
In the wake of the Ooh Media and Adshel deal, it was revealed there would be $18m in cuts as the new business found “cost synergies” from “leveraging combined infrastructure with duplicated resource rationalisation and reducing outsourcing costs”.
The Adshel brand has subsequently been retired, and become a division of Ooh Media, called Commute by Ooh.
In the wake of the deal, HT&E’s chairman Peter Cosgrove stepped down, saying the timing was right to move on from the business as the Adshel sale gives HT&E opportunities to strengthen its remaining assets.
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 in 2017 after two decades with JC Decaux.
In June last year, it was confirmed JC Decaux would purchase APN Outdoor for over $1bn.
APN Outdoor’s boss James Warburton then departed the business, before re-emerging as CEO of Seven West Media, replacing Tim Worner.
Former APN Outdoor boss, Warburton, is now CEO of Seven
Other outdoor players who exited the sector during the wave of consolidation have also re-appeared.
Adshel CEO Mike Tyquin left following its integration with Ooh Media, and now has a role heading up Woolworths’ media business, Cartology.
And sales director David Roddick is now at Foxtel Media (formerly MCN) as chief sales officer.
topics
Barclay Nettlefold
digital out of home
oOh
out of home
outdoor
outdoor advertising
QMS
QMS Media
Wayne Stevenson
This is interesting.
A private equity group is buying 100% of a listed company at a c. 36% premium to its last traded share price. The business is seemingly performing pretty well and the purchaser is reportedly intending to retain the company’s existing management team. Yes, the share price has been a little patchy since listing but it has been positive over the course of 2019.
If there is sufficient upside in the business to justify a private equity bid at a 36% premium, why would the current shareholders be in a hurry to sell out now?
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