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 per cent 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. It 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 on Thursday had elicited a frosty response from APN, 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 in the billboards and outdoor advertising market in Australia, according to research firm IBISWorld. HT&E ranks fourth.

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Reuters

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