JCDecaux to Buy APN Outdoor for $831 Million in Australian Bet

(Bloomberg) -- JCDecaux SA clinched a deal to buy billboard specialist APN Outdoor Group Ltd. for A$1.12 billion ($831 million) to rival its top Australian competitor, the largest acquisition for the French company in almost two decades.

The world’s biggest outdoor advertiser won unanimous support from APN’s board after sweetening its offer to A$6.70 a share in cash, according to a statement Tuesday. That’s 2.8 percent above JCDecaux’s previous unsolicited offer and 4.7 percent higher than APN’s last closing price of A$6.40.

APN’s billboards would complement JCDecaux’s Australian business, which is focused on street furniture such as bus stops, helping the French company challenge the country’s biggest outdoor advertiser, Ooh!media Ltd. The proposed acquisition, which would be JCDecaux’s largest since it went public in 2001, comes as industry consolidation in Australia heats up after Ooh!media this week outbid APN for outdoor advertiser Adshel.

The combined JCDecaux and APN businesses would have about 35 percent of the Australian market, roughly in line with Ooh!Media, Liberum analysts Annick Maas and Ian Whiitaker wrote in a note. That’s under the 40 percent regulatory threshold in the country and is therefore expected to be approved, the analysts wrote.

“We view this deal as positive for the company as JCDecaux tends to get better yields in more consolidated markets and the deal should be largely accretive,” Maas and Whittaker wrote.

JCDecaux, which has more than 1 million advertising panels in over 80 countries, gained 1 percent to 29.14 euros at 9:10 a.m. in Paris. APN climbed 0.3 percent to A$6.42 on Tuesday in Sydney.

Other details:

• The acquisition is subject to shareholder and regulatory approvals.
• APN’s board proposed a special dividend of as much as A$0.30 a share that if paid out, would be taken out of JCDecaux’s offer.
• Special dividend would have as much as A$0.13-a-share in franking credits attached. APN shareholders will be entitled to an interim dividend of as much as A$0.07 a share regardless of whether the deal goes through or not.
• Proposal implies an enterprise value that’s 12.9 times projected earnings before interest, taxes, depreciation and amortization.
• Deal is subject to approvals from the Australian Competition and Consumer Commission, the Australian Foreign Investment Review Board and the New Zealand Overseas Investment Office if required.
• APN investors will vote on the deal at a court-convened shareholder meeting and acquisition is expected to be completed in the fourth quarter of 2018. APN expects to update the market on a timetable next month.
• Allens, Cadence Advisory and Morgan Stanley advised APN.

APN tried to merge with Ooh!media last year but gave up after the Australian industry regulator warned the deal would lessen competition in the out-of-home advertising market.

Family-controlled JCDecaux had avoided big deals in Australia, expanding gradually across the world’s seventh-biggest advertising market since winning its first contract there in 2000.

APN initially told shareholders to take no action regarding the bid from JCDecaux, as it assessed the offer and pursued the purchase of Adshel. An attempt by JCDecaux to buy a combined APN and Adshel also would have run into regulatory opposition, analysts have said.

To contact the reporter on this story: Angus Whitley in Sydney at awhitley1@bloomberg.net

To contact the editors responsible for this story: Edward Johnson at ejohnson28@bloomberg.net, ;Young-Sam Cho at ycho2@bloomberg.net, Rebecca Penty, Phil Serafino

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