JCDecaux to acquire APN Outdoor for $1.12 billion
APN Outdoor Group has entered in an agreement with JCDecaux after the global advertising giant made a $1.119 billion offer to acquire the company, in a deal signed on Tuesday morning.
JCDecauc co-chief executive offer Jean-Francois Decaux described the acquisition as a "significant milestone" for the global company.
"APN Outdoor is very complementary to our existing street furniture assets and through this acquisition, JCDecaux will be attractively positioned to provide a compelling proposition to compete more effectively in the Australian media market where Out-of-Home accounts for 6 per cent of advertising spend, of which almost 50 per cent is digital," he said in a statement.
"Finally, we are delighted to enter New Zealand, a fast-growing market."
APN chief executive and managing director James Warburton said the agreement represented an "excellent outcome" for shareholders, partners and the company's 13,000 employees.
Mr Warburton told Fairfax Media there was "a lot of speculation" in the market with mergers and acquisitions, and saw this deal as "extremely attractive for staff, shareholders and landlords" representing a 25 to 35 per cent premium from a major organisation.
He expects it to be "business as usual" for the company, with some contract wins yet to be announced.
"We're looking forward to continuing to roll out our data and analytics product," he said.
APN went into a trading halt on Monday pending an announcement, several days after global advertising giant JCDecaux made an indicative non-binding $1.1 billion bid to acquire 100 per cent of the Australian business. The offer was then increased.
APN is the dominant out-of-home advertising company in Australia, with billboards, transit, rail and airport assets, while JCDecaux specialises in street furniture.
Out-of-home advertisers are battling it out for what is likely to be Australia's biggest advertising contract in history, for City of Sydney's street furniture, which is likely to come with a multi-year $500 million plus price. JCDecaux currently has this contract, having signed it prior to the Olympic Games in 2000.
The deal will need to be approved by the Australian Competition and Consumer Commission, and the Foreign Investment Review Board.
The move marks another major step towards consolidation in the advertising industry, with OohMedia announcing a $570 million acquisition of Here There & Everywhere's street furniture arm Adshel on Monday. This was $100 million more than originally offered.
APN had made its own bids for Adshel, with JCDecaux then entering the fray with an offer to buy the company on the condition it did not continue with a bid for the HT&E asset.
This is seen by some industry sources as an attempt to "block" APN from buying Adshel and growing as a major competitor. The OohMedia and Adshel deal will need to be cleared by the competition regulator and, provided this is approved and the shareholders vote goes ahead smoothly, is expected to complete during the year.
Mr Warbuton told Fairfax Media it was not for APN to predict the ACCC's outcome, but will await the decision and did not believe the deal would result in lessening competition.
"We don’t have any overlap really in terms of where the businesses are. [JCDecaux is] street furniture and we are billboards," he said.
An analyst note from Macquarie Wealth Management described the deal as "complementary", providing "increased scale, and [allowing OohMedia] to leverage its investment in data and systems across a larger inventory". Cost savings from synergies across the businesses are expected.
This is not the first time the outdoor advertising companies have looked for rationalisation in the market. In 2017, the ACCC flagged concerns aboout a $1.6 billion merger between OohMedia and APN on competition grounds. This ultimately led to the deal being dropped.
If the deal had gone ahead, it would have made the merged company the fifth-largest media company by market capitalisation at the time.