QMS and MediaWorks outline finalised merger plans

Lindsay Bennett
By Lindsay Bennett | 10 December 2018
 

QMS Media has outlined plans for its proposed merger of its NZ digital out-of-home business and Mediaworks, a local independent radio, TV and digital business.

In an announcement to the ASX, QMS said it will merge its NZ out-of-home, digital media and production businesses into MediaWorks and in return will receive a 40% shareholding in the expanded business.

MediaWorks’ CEO Michael Anderson will continue as CEO of the combined group leading what is to become the largest multi-media advertising group in New Zealand.

QMS will receive a capital return of approximately A$35m (subject to the finalisation of financing terms), which will provide increased financial flexibility for the QMS Media Limited group.

The transaction is subject to final binding terms as well as several customary conditions and is expected to complete in the second quarter of calendar year 2019.

Anderson said the partnership will demonstrate the strength of a true multiplatform, local media company.

"Since announcing the proposal to merge, we have seen strong support from our clients who recognise the power of the integration we will now be able to provide across the four platforms. I am looking forward to bringing the businesses together, with our continued focus on local content and local client solutions," he said.

QMS chairman Wayne Stevenson said the merger will allow shareholders to unlock greater value.

“For QMS, this merger reinforces our prudent management of assets and realises value for shareholders from our investments in New Zealand," he said.

QMS CEO and managing director Barclay Nettlefold added: “It will be difficult to match the combined capabilities of this new multi-media group in New Zealand. This strategic approach is at the forefront of developing global industry trends and is the right decision, with the right partner and at the right time for QMS.”

The full merger plans here:

  • Funds managed by Oaktree Capital Management, L.P (Oaktree) will retain a majority 60% shareholding.
  • The merger implies a blended EV/EBITDA multiple of 10x forecast CY18 EBITDA (presynergies) for the QMS NZ businesses. QMS NZ is budgeted to deliver an A$12.8m contribution to the QMS Media Limited group in FY19.
  • QMS will receive a capital return of approximately A$35m (subject to the finalisation of financing
  • terms), which will provide increased financial flexibility for the QMS Media Limited group.
  • Transaction completion is subject to finance approval and other customary conditions (including
  • Overseas Investment Office NZ) and is expected to complete in the second quarter of CY19.
  • The transaction is expected to be earnings per share (EPS) accretive for QMS Media
  • shareholders in FY20, post cost and revenue synergies.
  • QMS will hold two seats on the Board, with Oaktree holding three.

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