Today APN Outdoor and oOh! Media advised that the proposed merger has been terminated.
The Australian Competition and Consumer Commission's (ACCC) Statement of Issues outlined its preliminary view that the proposed merger would likely result in a substantial lessening of competition in the supply of out-of-home advertising services. APN Outdoor and oOh! Media disagree with the view.
According to a release from oOh! Media: "Both parties maintain that the commercial reality is that out-of-home advertising competes extensively and directly with other media channels and as such a narrow market definition is inappropriate. The advertising market is increasingly dominated by on-line digital advertising services and a merger of the two businesses would enhance, rather than restrict, the development of the out-of-home advertising services in Australia.
However, after detailed consideration, the parties’ view is that the nature and extent of ACCC’s indicative intervention now represents an unacceptable risk to a successful merger. Furthermore, it is the parties’ view that offering the material concessions to the ACCC which are likely to be required to ultimately allow the proposed merger to proceed would adversely compromise the overall merits of the transaction."
And with that, another merger proposal bites the dust.
Original merger story:
In a year of media mergers and merger talks, oOh! Media and APN Outdoor are getting in on the action by announcing a merger to the ASX this morning.
The rationale behind the merge is to create "a service offering across key out-of-home formats, including roadside billboards, transit, rail, airports, retail, offices and other bespoke venue environments, and will enable the Merged Group to benefit from the digital and classic out-of-home capabilities of both businesses across the enlarged portfolio," according to the announcement.
That enlarged portfolio across New Zealand and Australia has over 72,000 out-of-home assets, including 8985 digital and 63,200 classic screens and panels. It’s hoped the expanded audience reach and diversity will provide an attractive offering for advertisers and media agencies.
To complete the merge, the transaction will see oOh! Media shareholders receive 0.83 APN Outdoor shares for each oOh! Media share held. Once the completed, existing APN Outdoor and oOh! Media shareholders will own 55 percent and 45 percent respectively of the merged group.
Chairman of oOh! Media Michael Anderson, said: “We believe the amount of cost synergies expected to be generated, and the resulting EPS accretion will create substantial value for both shareholder groups. 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.”
APN Outdoor chairman Doug Flynn added it's a compelling opportunity for shareholders and it's excited by the growth opportunities presented by the merger.
The merged group’s board will consist of eight directors, with four being from APN Outdoor’s current board and four being from oOh! Media’s current board.
Flynn will be appointed as the merged group’s chairman, oOh! Media CEO and founder Brendon Cook is to be appointed as the merged group’s CEO and managing director, and APN Outdoor chief financial officer Wayne Castle as the chief financial officer.
To facilitate the merger, both Peter McClelland, chief financial officer and chief operating officer of oOh! Media, and Richard Herring, CEO of APN Outdoor, will step aside.
Herring will continue to be available for 12 months after oOh! Media shareholders receive the APN Outdoor shares, as a consultant to assist as required.
He has been CEO of APN Outdoor for 16 years and has spent 22 years in the out-of-home industry. According to the announcement, he is keen to explore other opportunities in the business world.
Subject to the approval of oOh! Media shareholders and other conditions of the scheme being satisfied, it is expected to be implemented in April 2017.