(Reuters) - Australian advertiser Ooh!Media Ltd is scooping up bus stop advertising business Adshel for $424 million after outbidding rival suitor APN Outdoor which has itself received a takeover offer from French advertiser JCDecaux.
The deals rush is aimed at dominance in Australia’s lucrative outdoor ad market where four firms control 97 percent of the A$900 million ($660 million) industry, with digital ad boards dramatically lifting their earnings potential. The M&A activity, however, is drawing close scrutiny from regulators.
Ooh!Media said on Monday it has struck a deal with media company HT&E Limited to buy Adshel for a sweetened A$570 million ($424.02 million), including debt.
“The digitisation opportunity in the Adshel business is expected to provide a significant avenue for further growth beyond what has been achieved to date,” Ooh!Media’s chief executive Brendon Cook said in a statement.
APN subsequently halted trading in its shares, citing a pending update on the JCDecaux takeover offer. The Paris-based firm said in a statement that it continues to be in discussions with APN on its offer, without giving any more details.
APN had sweetened its offer for Adshel on Friday by 8 percent to A$540 million including debt, substantially higher than Ooh!Media’s initial A$470 million proposal made in April.
JCDecaux’s A$1.09 billion offer for APN on Thursday had elicited a frosty response from the target, which had responded by saying the premium offered was modest and that it was actively pursuing Adshel. JCDecaux had made its offer conditional upon APN ditching its bid for Adshel, a direct competitor of the French firm.
Hastening the shakeout in Australia’s outdoor ad market is the competition watchdog, which last year blocked a merger between APN and Ooh!Media.
It was, therefore, seen likely to refuse JCDecaux from buying anyone that controls Adshel, because it would deliver them a street-furniture advertising monopoly. The French advertiser is the third biggest in Australia by market share.
APN, Ooh!Media rank first and second, respectively, in the billboards and outdoor advertising market in Australia, according to research firm IBISWorld. HT&E ranks fourth.
Trading in Ooh!Media shares was halted on Monday while the company arranges a capital raising. HT&E shares soared 8.1 percent, hitting a 10-month closing high of A$2.66, while the broader market fell 0.2 percent. JCDecaux shares rose 0.7 percent in early trade in Paris.
($1 = 1.3443 Australian dollars)
Reporting by Rushil Dutta in Bengaluru. Additional reporting by Chandini Monnappa and Aditya Soni in Bengaluru and Tom Westbrook in Sydney; Editing by Muralikumar Anantharaman