The proposed merger between outdoor giants APN Outdoor and oOh! Media has been terminated due to the ACCC’s concerns of the lessening of competition in the field.
The merger would have made the proposed single entity worth $1.6bn making it Australia’s biggest outdoor media business.
The ACCC released its statement of issues earlier this month outlining 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.
In a statement released by both parties, APN and Ooh! disagree with the ACCC’s views, ‘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 online 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.’
The statement continues, ‘However, after detailed consideration, the parties’ view is that the nature and extent of ACCC indicative intervention now represents and 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.’
[Related: ACCC postpones oOh! APN merger decision]
Neither party will pay the other any break fee in connection with the termination of the deed.
oOh! Media says it is disappointed with the outcome, particularly in light of the broad commercial recognition of the increased market power of significant international online players and the diversity of media options within the Australian media market.
Brendan Cook, CEO, oOh! Media says, “oOh! Media approached this transaction as a positive move for advertisers, agencies and landlords, and viewed the potential combination as an exciting opportunity for the media market.
“We are amazed that in this day and age, the media market could be divided into narrow segments, and we cannot fathom how anyone could suggest a merger such as this could restrict innovation – innovation is core to our business and always will be, and by its nature is not limited by funding, it is available to anyone who makes it a core part of their strategy.”
Cook says the company does not agree with the ACCC position, “We do not want to spend 6 to 12 months educating the ACCC or in court, especially as the media market is changing so quickly – hence our mutual decision. Despite this decision, we remain focused on continuing to enhance the value of our innovative and established businesses and continue to deliver on and build out our clear strategy. As always, we will continue to look for opportunities that align with our new media strategy and enhance shareholder value.”
The proposed merger saw the new group would have an enhanced geographic presence across Australia and New Zealand with 8,989 digital and 63,200 classic screens and panels across metropolitan and regional locations. The deal would have given oOh! shareholders 0.83 APN shares for each oOh! share held.
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