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A BIDDING war for a bigger slice of the lucrative outdoor advertising sector appears to be on the cards as APN Outdoor Group (ASX:APO) reveals it is offering $500 million for the Adshel business.
The indicative offer for Adshel, owned by Here There & Everywhere (ASX:HT1) and operator of Australia's largest street furniture advertising network, has pipped an earlier offer of $470 million by oOoh!media (ASX:OML).
HT1, formerly known as APN News & Media, first revealed on April 11 that OML had submitted an offer for Adshel, quashing media rumours that a full takeover of the group was being considered.
The initial bid was rejected by the board for not adequately reflecting the value of the Adshel outdoor advertising business.
However, APO which is headed by former V8 Supercars CEO and one-time boss of Network Ten, James Warburton, this week revealed it was prepared to pay $500 million for Adshel's Australian and New Zealand operations.
APN Outdoor says the proposal is subject to a range of conditions, including due diligence and regulatory approvals from the ACCC and the NZCC.
It says Adshel's Street Furniture business would provide 'an attractive complement to APO's Out of Home product offering'.
Adshel's advertising reach includes 13,000 street furniture locations such as bus strops and railway stations, 3000 digital screens and 2000 7-Eleven panels.
Adshel reported revenue growth of 7.5 per cent to $222 million in FY17 despite losing a key Yarra Trams contract.
"At this early stage, no agreement has been reached between the parties and there is no certainty that the proposal will result in any transaction," says APO in a statement to the ASX.
There is no indication yet from OML whether it is willing to raise its offer after sweetening the pot at the end of April to $470 million following the cool response by the HT1 board to the original offer.
An acquisition by APO would bring the Adshel business back under the APN umbrella after it was sold to private equity group Quadrant five years ago.
Meanwhile, APO's says it continues to explore a range of merger and acquisition opportunities aside from Adshel with a view to improving its 'positioning and capabilities in the Australian and New Zealand media markets'.
The latest shake-up in the outdoor advertising industry follows a failed attempt by OML to merge with APO last year.
Shares in the suitors both fell today, while shares in HT1 surged about 6 per cent in early trading.
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