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JCDecaux to buy APN Outdoor for A$1.12b

Sydney

JCDECAUX SA clinched a deal to buy billboard specialist APN Outdoor Group for A$1.12 billion (S$1.13 billion) to rival its top Australian competitor, the largest acquisition for the French company in almost two decades.

The world's biggest outdoor advertiser won unanimous support from APN's board after sweetening its offer to A$6.70 a share in cash, according to a statement on Tuesday. That's 2.8 per cent above JCDecaux's previous unsolicited offer and 4.7 per cent higher than APN's last closing price of A$6.40.

APN's billboards would complement JCDecaux's Australian business, which is focused on street furniture such as bus stops, helping the French company challenge the country's biggest outdoor advertiser, Ooh!media. The proposed acquisition, which would be JCDecaux's largest since it went public in 2001, comes as industry consolidation in Australia heats up after Ooh!media this week outbid APN for outdoor advertiser Adshel.

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The combined JCDecaux and APN businesses would have about 35 per cent of the Australian market, roughly in line with Ooh!Media, Liberum analysts Annick Maas and Ian Whiitaker wrote in a note. That's under the 40 per cent regulatory threshold in the country and is therefore expected to be approved.

"We view this deal as positive for the company as JCDecaux tends to get better yields in more consolidated markets and the deal should be largely accretive," wrote the analysts.

JCDecaux, which has more than 1 million advertising panels in over 80 countries, gained 1 per cent to 29.14 euros (S$46.31) at 9.10am in Paris. APN climbed 0.3 per cent to A$6.42 on Tuesday in Sydney.

APN's board proposed a special dividend of as much as A$0.30 a share that if paid out, would be taken out of JCDecaux's offer.

Special dividend would have as much as A$0.13 apiece in franking credits attached. APN shareholders will be entitled to an interim dividend of as much as A$0.07 a share regardless of whether the deal goes through or not.

Proposal implies an enterprise value that's 12.9 times projected earnings before interest, taxes, depreciation and amortisation.

Deal is subject to approvals from the Australian Competition and Consumer Commission, the Australian Foreign Investment Review Board and the New Zealand Overseas Investment Office if required.

APN investors will vote on the deal at a court-convened shareholder meeting and acquisition is expected to be completed in the fourth quarter of 2018. APN expects to update the market on a timetable next month.

Allens, Cadence Advisory and Morgan Stanley advised APN.

APN tried to merge with Ooh!media last year but gave up after the Australian industry regulator warned the deal would lessen competition in the out-of-home advertising market.

Family-controlled JCDecaux had avoided big deals in Australia, expanding gradually across the world's seventh-biggest advertising market since winning its first contract there in 2000.

APN initially told shareholders to take no action regarding the bid from JCDecaux, as it assessed the offer and pursued the purchase of Adshel. An attempt by JCDecaux to buy a combined APN and Adshel also would have run into regulatory opposition, analysts have said. BLOOMBERG