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It’s off: APN and oOh!Media abandon $1.6bn merger after ACCC concerns

Friday, 19 May 2017
By Jake Nelson

APN Outdoor and oOh!Media have called it quits on their proposed merger, walking away from the massive $1.6 billion deal after the ACCC released a statement of issues expressing ‘preliminary concerns’ earlier this month.

In a joint statement to the ASX, the two leading out-of-home advertising suppliers in Australia and New Zealand said that though they disagreed with the consumer watchdog’s concerns that the deal would ‘substantially lessen competition in the out-of-home advertising market’, the ACCC’s intervention had effectively scuppered the merger.

Both parties maintain that the commercial reality is that out-of-home advertising competes extensively and directly with other media channels and as such a narrow market definition is inappropriate. The advertising market is increasingly dominated by online digital advertising services and a merger of the two businesses would enhance, rather than restrict, the development of the out-of-home advertising services in Australia, the statement read.

However, after detailed consideration, the parties’ view is that the nature and extent of ACCC’s indicative intervention now represents an unacceptable risk to a successful merger. Furthermore, it is the parties’ view that offering the material concessions to the ACCC which are likely to be required to ultimately allow the proposed merger to proceed would adversely compromise the overall merits of the transaction.

Rod Sims, chairman ACCC

The ACCC released its statement of issues on May 4, expressing concerns that the merger would reduce competition in the out-of-home advertising sector. “The loss of competition could result in increased prices for advertisers, or lower levels of service, quality, or innovation,” said Rod Sims, chairman.

“Further, the ACCC is concerned the merger may damage the interests of site owners, who rely on competition between APN Outdoor and oOh!media to obtain the maximum rent for their sites.

“Industry participants have also raised concerns that the combined APN Outdoor/oOh!media will be able to squeeze competitors out of the market, by bundling billboards, where it has a dominant position, with other forms of out-of-home advertising.”

Brendon Cook, oOh!media

Brendon Cook, managing director of oOh!Media, said both companies were disappointed with the ACCC’s position, and that he is ‘amazed’ that the media market continues to be divided into narrow segments. “We cannot fathom how anyone could suggest a merger like this could restrict innovation – innovation is core to our business and always will be, and by its nature is not limited by funding, it’s available to anyone who makes it a core part of their strategy.

“Despite this decision, we remain focused on continuing to enhance the value of our innovative and established businesses and continue to deliver on and build out our clear strategy. As always, we will continue to look for opportunities that align with our new media strategy and enhance shareholder value,” Cook said in a statement.

APN Outdoor has indicated it will continue to pursue its current market strategy.

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