Home World Business ACCC weighs in on $735m battle for billboard domination

ACCC weighs in on $735m battle for billboard domination

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A plan by the country’s top billboard firm to buy its largest rival may jack up the prices charged to advertisers while cutting service levels, a sign it may block the $735 million deal, the competition watchdog has warned.

Announcing the all-shares deal in December, APN Outdoor Group and target firm oOh!Media said the transaction would cut overhead costs and improve their ability to grow.

oOh!media is one of Australia's largest billboard owners. oOh!media is one of Australia’s largest billboard owners.  Photo: Supplied

For shareholders of oOh!Media, the deal, worth A$4.48 per share, represented a more than doubling of its issue price when it listed just two years earlier.

Shares of APN fell 4.6 per cent but recovered in the afternoon to close up 1.26 per cent at $2.42. Meanwhile oOh!Media’s stock slid 4 per cent and recouped only some of those losses to close at $4.33 down 4.56 per cent.

oOh!media chief executive Brendon Cook would stay on as head of the combined group. oOh!media chief executive Brendon Cook would stay on as head of the combined group. Photo: Peter Braig

The Australian Competition and Consumer Commission (ACCC), said on Thursday that it took the preliminary view that combining the companies would amount to a “substantial lessening of competition in the supply of out-of-home (OOH) advertising services”.

“The proposed merger would result in the consolidation of the number one and number two providers in OOH advertising services in Australia and create a market leader with over 50 per cent share of the OOH advertising market,” the ACCC statement of issues said.

It may also result in less innovation, it added.

APN and oOh!Media said they would work with the regulator to address the matters it had raised.

“We are currently considering next steps, including impacts on the proposed transaction timeline,” the companies said in a joint statement.

Out-of-home advertising includes advertising on billboards, at bus shelters, train stations, trains, taxis, buses, leisure centres, public toilets, shopping malls and supermarkets.

The ACCC is due to make its final ruling on July 6.

Reuters

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