Out-of-home advertisers APN Outdoor and oOh!media have signed a $1.6 billion “merger of equals” deal that will see with APN Outdoor shareholders taking 55 per cent of the newly merged group.
“The market may well view the deal as a takeover but both companies have a strong conviction about this being a merger of equals,” said a spokesperson for APN Outdoor.
The two listed companies outlined their plan in a joint statement to the ASX this morning that forecast annual “cost synergies” – including some job losses - of at least $20 million and pre-tax earnings of $171 million after one year.
The merger is expected to be implemented in April 2017, subject to approval by competition watchdog the ACCC and oOh!media shareholders, who will take a 45 per cent share of the merged group.
oOh!media shareholders would receive 0.83 APN Outdoor shares for each oOh!media share held, and oOh!media’s board of directors has unanimously recommended that shareholders vote in favour of the deal.
APN Outdoor chairman Doug Flynn will chair the merged group’s board, which will include eight directors – four each from APN Outdoor and oOh!media. oOh!media chief executive Brendon Cook will be managing director, meaning current APN Outdoor boss Richard Herring has been forced out.
“Due to the compelling nature of the transaction for shareholders, Richard has agreed to stand aside to facilitate this attractive merger,” said Flynn. “After 16 years as a chief executive and 22 years in the out-of-home industry, Richard is keen to explore other opportunities in the business world.” Herring would "continue to be available for 12 months from the implementation of the transaction to assist as a consultant."
APN Outdoor’s Wayne Castle has been named chief financial officer of the new company, leaving out current oOh!media CFO Peter McClelland.
“Peter has also graciously agreed to stand aside to facilitate this merger,” said Michael Anderson, chairman of oOh!media.
“We believe the amount of cost synergies expected to be generated, and the resulting EPS (earnings per share) accretion will create substantial value for both shareholder groups," Anderson said. "We are pleased that the enhanced balance sheet strength and financial scale, together with increased funding opportunities, will support the Merged Group’s ability to pursue future growth and digitisation opportunities.”
Flynn said: “We are excited by the growth prospects presented by this merger. The businesses bring together complementary asset portfolios across key formats in metropolitan and regional markets to create a leading and diversified out-of-home and digital online media group in Australia and New Zealand. The merger of APN Outdoor and Ooh Media is a compelling opportunity for all shareholders.”
The merged group will have an enhanced geographical presence across Australia and New Zealand with 8,985 digital and 63,200 “classic” screens and printed billboard panels across metropolitan and regional locations.
The deal caps off a busy year in the booming out-of-home advertising market.
In June, oOh!media acquired 85 per cent of media and publishing group Junkee Media for $11 million. In July, APN Outdoor bought Metrospace and iOM for about $32 million.
In October, oOh!media acquired digital display business Executive Channel Network (ECN) for $68.5 million, and APN News & Media paid $268 million for the remaining 50 per cent of outdoor ad company Adshel.
oOh!media shareholders will vote on the proposed deal at a meeting scheduled for March 2017.