Australia’s biggest outdoor media company oOh! Media will trade on the ASX from December 17 following a $293m initial public offering.
Private equity owner Champ will float 53.8 per cent of the company for $1.93 a share, dropping its holdings to 32.2 per cent, after last month deciding going public was a better option than a trade sale to Channel Nine.
The price is significantly lower than the $2.45-2.85 expected when the float was announced, and will raise more than $100m less. The big reprice is likely influenced by APN Outdoor’s share price falling below its $2.55 initial offer.
The prospectus released with the IPO plan has little good news for its printers Priority Printing Solutions, Billboard Media, and Opus subsidiary Cactus Imaging, however, with oOh! emphasising digital growth at the expense of print.
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The company expects to increase the proportion of its revenue that comes from digital from about 25 per cent, already more than twice the industry average, to 30 per cent at $80m by the end of 2015 and ‘significantly higher’ over the next three to five years.
It plans to digitise 15 to 20 of its marquee billboards next year and says a key part of its digital strategy is to ‘progressively digitise [its] existing asset base’.
oOh! has increasingly become a digital-first company but mostly focused its digitising on the retail and transport markets. The move to convert billboards now puts Cactus and Billboard Media in the firing line.
This follows APN Outdoor expressing similar sentiments during its recent $329m IPO, where it revealed plans to digitise up to 150 of its printed billboards.
Still, out-of-home advertising is a growing market, on track for another record year of almost eight per cent growth, and oOh! chief executive Brendan Cook predicts the industry will grow its market share from 4.8 to 6 per cent over the next few years.
Cook says there will still be plenty of opportunities for printers as campaign lengths have shortened from 12 months to as little as four weeks as advertisers looks for more immediacy.
He says digital is mostly cost effective in quality sensitive environments such as shopping centres, airports, and major traffic chokepoints where there is more competition for eyeballs and customers have more time to look.
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About 10 per cent of oOh!’s 4200 billboards and 22 per cent of its 14,000 retail ads are digital, segments that make up 71 per cent of its revenue, compared to more than half of its retail assets. Digital revenue is expected to rise from $57 to $80m next year.
The company has a 35 per cent market share in outdoor advertising, including 70 per cent of retail and airports and 44 per cent of billboards.
It is expected to make a $28.5m loss this calendar year on $258.6m revenue, and improve to a $12.5m profit with $266m revenue for 2015.
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