Outdoor merger mania: APN Outdoor finds extra $40m for Adshel bid

APN Outdoor has submitted a revised proposal to acquire 100% of the Adshel businesses in ANZ.

While APN Outdoor is itself the subject of a takeover offer from JCDecaux, APN Outdoor is continuing with its bid for street furniture specialist Adshel.

APN Outdoor CEO James Warburton on Adshel bid and growth plans

APN Outdoor has submitted a revised proposal to acquire 100% of the Adshel businesses in Australia and New Zealand, from HT&E.

In a statement to the ASX, APN Outdoor has explained that Adshel’s street furniture assets, combined with APN Outdoor’s transit and billboard platforms, represent an important strategic expansion for APN Outdoor.

Key Highlights of Proposal:

• Purchase price of $540 million

• Adshel’s FY18PF EBITDA is estimated to be $48 million to $50 million, implying an acquisition multiple at the midpoint of 11.0x EV/EBITDA (pre-synergies)

• Expected pre-tax cost synergies of not less than $15 million per annum, phased in over 18 months

APN Outdoor’s strategic rationale

The acquisition of Adshel would increase diversification across APN Outdoor’s out-of-home formats and provide a new platform for growth.

Upon completion of the proposed acquisition, APN Outdoor would become a more diverse out-of-home media group combining its billboard and transit platforms with Adshel’s street furniture assets in Australia and New Zealand. APN Outdoor would expect to benefit from an increased audience reach and a diversified asset base across a number of out-of-home formats.

The out-of-home advertising industry’s fundamentals remain sound, supported by growing audiences, increased digital inventories and enhanced data analytics. The out-of-home industry’s share of total advertising spend in Australia remains under-represented relative to international markets, providing further opportunities for sector growth.

Within the out-of-home advertising industry, street furniture offers solid growth prospects through digitisation. Adshel is still in the infancy of inventory digitisation, with only a small proportion of its Australian inventories digitised.

In addition, the sharing of digital technology and data analytics capabilities across the combined group would be expected to improve advertiser ROI and create an opportunity for APN Outdoor to invest further in innovation.

APN Outdoor chief executive officer and managing director James Warburton said: “The acquisition of Adshel would represent an important step in our strategy to expand APN Outdoor, deliver new solutions and ideas to our advertisers and generate long-term, sustainable growth for our shareholders.

“There is an opportunity for us to use our expertise in large-scale digital developments to support the rollout of digital across Adshel’s street furniture format, particularly in Australia. We expect this would enable us to bring digital to a broader range of advertisers and complement our existing product offering to those advertisers.

“The combination of Adshel and APN Outdoor also represents an opportunity to realise meaningful cost synergies through the rationalisation of duplication across management, sales and back-office functions.”

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