APN Outdoor and oOh! Media Announce Merger

A new interactive digital out-of-home (DOOH) advertising campaign for Google Play, their newly launched entertainment portal for Android mobile devices

Merger Creates Diversified Out-of-Home and Online Media Group Across Australia and New Zealand

AUSTRALIAAPN Outdoor and oOh! Media will merge operations on or around April 2017 to create one of the largest media companies with reach across across Australia and New Zealand. The combined company will have digital and traditional media assets across out-of-home ad space that include roadside billboards, transit, rail, airports, retail, offices and other environments.

The combined companies will have an enhanced geographic presence across Australia and New Zealand with 8,985 digital out-of-home screens and 63,200 traditional static panels across metropolitan and regional locations. The combination of portfolios will create an attractive offering for advertisers, with expanded audience reach and diversity. These factors are expected to provide an attractive product offering to end customers and media agencies.

According to APN Outdoor and oOh! Media, the combined companies will benefit from synergies that include the experience and expertise that comes from a combined management team and board. The Board will comprise eight Directors, with four each from APN Outdoor’s and oOh!media’s current Boards. Doug Flynn will be appointed as the Merged Group’s Chairman, Brendon Cook appointed as the Merged Group’s CEO and Managing Director, and Wayne Castle as the Chief Financial Officer.

The merger is expected to deliver pre-tax cost synergies of at least $20 million per year, on a full run-rate basis and excluding one-off transaction and integration costs. 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. These include savings in broad group expenditure, costs relating to installation, production and systems, rationalization of head office costs and savings in outsourced costs under a single operating model. These synergies are expected to be achieved within two years from completion of the Transaction, while one-off implementation costs are projected to be approximately $10 million.

The Transaction is expected to deliver FY16 pro forma earnings per share (EPS) accretion of 14.7% and 14.2% respectively to existing APN Outdoor and oOh!media shareholders.6,7 The Merged Group will have enhanced financial scale and balance sheet strength, which will support its ability to pursue future growth opportunities. On completion of the Transaction, existing APN Outdoor and oOh!media shareholders will own 55% and 45% respectively of the Merged Group.

“The merger of APN Outdoor and oOh!media 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. We are excited by the growth prospects presented by this merger,” said Doug Flynn, Chairman of APN Outdoor.

“The combination of these businesses will create an attractive media offering, supported by a passionate and experienced team. We believe the amount of cost synergies expected to be generated, and the resulting EPS accretion will create substantial value for both shareholder groups,” said Michael Anderson, Chairman of oOh!media. “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 digitization opportunities.”

Cadence Advisory and UBS are acting as financial advisers to APN Outdoor, while Gilbert + Tobin is acting as legal adviser. Highbury Partnership and Macquarie Capital are acting as financial advisers to oOh!media, while Herbert Smith Freehills is acting as legal adviser.

Last October, oOh! Media acquired Executive Channel International Pty Ltd (ECN) for $68.5 million through oOh!’s wholly owned subsidiary, Inlink Group Pty Ltd, which the company acquired in 2015. Executive Channel Network operates a leading network of digital displays in CBD office towers and car park environments across Australia. The acquisition expanded oOh! Media’s inventory, bringing the number of office buildings under management between Executive Channel and Inlink to over 630 and more than 3,500 displays across Australia.

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