oOh! Media successful with $570m bid for Adshel

Bidding war for out-of-home player, Adshel, concludes after oOh! offers $570m purchase price

Ooh! Media has struck an agreement with rival out-of-home advertising player, Adshel, to acquire the business for $570 million, ending a bidding war for the latter business.

ASX-listed oOh!Media confirmed it had entered a binding agreement to acquire 100 per cent of share capital in Adshel from its parent, HT&E, for $570 million, with completion expected this year subject to ACCC approval. The purchase will be funded by a combination of $450 million in new debt and equity capital raising.

The successful bid from oOh! Media ends months of fierce bidding for the Adshel business between oOh!Media and its rival, APN Outdoor Group, itself the subject of a $1.09 billion acquisition bid by third player, JCDecaux.

OOh! kicked things off back in April with a $470 million bid for Adshel, which was promptly rejected by HT&E. On 22 May, APN Outdoor launched its $500 play for Adshel, saying the deal represented an important strategic expansion of its business.

Last week, APN upped its bid for Adshel to $540 million, just a day after JCDecaux lodged an unsolicited $1.09 billion bid for APN itself.

In a statement, oOh! CEO, Brendon Cook, said Adshel is highly complementary to its existing portfolio, opening up street furniture and rail specifically in Sydney and Melbourne as new segments while upping reach in different audience locations. He also signalled further opportunity to digitise Adshel’s assets, noting only 4 per cent of the company’s street furniture estate has been digitised to date. In contrast, about 40 per cent of oOh!’s assets have been digitised, representing 60 per cent of revenue during the 2017 financial year.

Cost synergies from the acquisition, specifically from combined infrastructure and resourcing, are expected to be between $15 million and $18 million and to be fully realised by 2020. For example, oOh! expects about $3 million in back offices and facilities synergies as part of the deal.

“The digitisation opportunity in the Adshel business is expected to provide a significant avenue for further growth beyond what has been achieved to date,” he said. “We are confident that oOh! shareholders will enjoy the benefit of cost synergies arising from the acquisition.”

Adshel provides poster and digital advertising on street furniture across Australia and New Zealand. Its inventory includes more than 21,000 poster faces and 887 digital screens, which it claims reach 92 per cent of Australia’s population as well as 87 per cent of New Zealand’s population.

Adshel reported revenue of $221.3 million in the 2017 financial year, with EBIDTA of $51.5 million.

Ooh! also confirmed it expected full-year EBIDTA guidance for 2018 to be between $94 million and $99 million, a 4.3 per cent to 9.9 per cent increased year-on-year and remaining consistent with guidance figures released in February.

The news saw APN call its own ASX trading halt, pending the release of an announcement by 27 June relating to the JCDecaux offer.

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