The two biggest outdoor companies in Australia, APN Outdoor and OohMedia, are set to merge to in the pursual of "future growth and digitisation opportunities".
The merged group would have a profit of $171 million if FY16 figures were combined. The combination is forecast to achieve cost synergies of at least $20 million per annum.
As part of the move APN Outdoor CEO Richard Herring will stand aside after 16 years in the position to help facilitate the merger.
APN outdoor chairman Doug Flynn says: “Due to the compelling nature of the transaction for shareholders, Herring has agreed to stand aside to facilitate this attractive merger. After 16 years of chief executive and 22 years in the out-of-home industry, Herring is keen to explore other opportunities in the business world. On behalf of the APN outdoor board I would like to thank Herring for the traffic job he has done in growing the business and wish him the best for his future endeavours.”
OohMedia chief financial officer and chief operating officer Pete McClelland will also leave the business ahead of the merger.
Flynn says: “The merger of APN outdoor and OohMedia is a compelling opportunity for shareholders. The businesses bring together complementary asset portfolios across key formats in metropolitan and regional marketers 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 prospected by the mergers.
According to the ASX announcement, APN Outdoor and OohMedia expect the merger to "create a leading, diversfied media group" and provide "significant value accretion to be shared by both shareholder groups”.
OohMedia chairman Michael Anderson says: “The combination of these businesses will create an attractive media offering, supported by a passionate and experienced team. We believe the amount of the cost synergies expected to be generation and the resulting EPC accretion will create substantial value for both shareholder groups.
"We are pleased that the enhanced balanced sheet strength and financial scale, together with increased funding opportunities will support the merged group’s ability to pursue future growth and digitisation opportunities.”
Ownership of the merged group will be split between APN Outdoor and OohMedia shareholders 55% to 45%, respectively.
The move follows APN's recent $268m acquisition of Adshel from US company Clear Channel Outdoor.
In the last year APN has been bolstering its outdoor assets four months after News Corp agreed to purchase its regional media newspaper business ARM for $36.6 million and it completed its acquisition of Adshel.
The directors of APN Outdoor and Oo Media unanimously agreed combining is in the best interests of respective shareholder groups. OohMedia’s board of directors have recommended the company’s shareholders vote in favour of the scheme.
The deal is expected to be complete around April 2017.
The ACCC will be commencing a public review shortly. It is waiting on information from the merger parties before commencing its review.
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