oOh! Media to merge with APN Outdoor

Outdoor media operators APN Outdoor and oOh! Media have revealed plans to merge into a single entity which will be worth $1.6bn and will create Australia’s biggest outdoor media business.

The merged group with 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 is set to see oOh! shareholders receive 0.83 APN shares for each oOh! share held.  The merger is forecasted to achieve cost synergies of some $20m per annum, with one-off implementation costs reaching $10m.

Once the transaction is complete shareholders will own 55 per cent of APN Outdoor and 45 per cent of oOh! Media.

oOh! CEO Brendon Cook will remain CEO and managing director of the newly merged group following completion, with four directors from both companies set to join a new eight-person board.

[Related: Opus sells Cactus to oOh!]

APN CEO Richard Herring is set to depart the business following the merger after 16 years with the company. He will stay on board for 12 months as a consultant for the transaction.

The companies say the rationale for the deal, “combines two exciting out-of-home companies with complementary, long-term and diversified assets across classic, digital and online platforms, including an attractive and industry-leading portfolio of digital assets.

The transaction creates a service offering across out-of-home formats, including roadside billboards, transit, rail, airports, trail, 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 oOh!, a combined APN and Ooh! merger may see rationalisation of facilities and the shrinking of costs associated with sign production and installation. APN and oOh! have offices in Sydney, Melbourne, Perth, Adelaide and Brisbane, with oOh! operating in Auckland too.

Earlier in the year oOh! bought Cactus Imaging to control its own print supply, oOh! makes up about 20 per cent of the Cactus output.

“The merger is expected to deliver pre-tax cost synergies of at least $20m per annum. Identified cost synergies primarily reflect the leveraging of the combined infrastructure, the elimination of duplication in the combined business and the reduction of outsourced costs,” oOh! says in a statement to investors.

“These include savings in broad group expenditure, costs relating to installation, production and systems, rationalisation in head office costs and savings in outsourced costs under a single operating model.”

[Related: APN to takeover outdoor giant Adshel]

APN chairman Doug Flynn says this merger is a compelling opportunity for all shareholders.

“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,” he says.

“We are excited by the growth prospects presented by this merger.”

oOh! Media chairman Michael Anderson says the combination of these businesses will create an attractive media offering.

“We believe the amount of cost synergies expected to be generated and the resulting EPS accretion will create substantial value for both shareholder groups,” he says.

“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,” he added.

Both directors from respective companies believe this transaction is in the shareholders best interests. oOh! Media’s board of directors unanimously recommend oOh! Media shareholders vote in favour of the scheme as this move is in their best interest.

The deal is expected to be complete by April 2017 subject to investor approval. 

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