CHAMP Private Equity’s oOh!media to buy Eye Corp
CHAMP Private Equity’s oOh!media has agreed to buy Eye Corp, Ten Network Holdings’ outdoor advertising business. The deal values Eye at up to A$145 million, of which A$120 million will be paid in cash on completion, with the remainder due in three years time.
Outdoor Media Operations, oOh!media's parent company, was bought by CHAMP late last year. It plans to retain Eye's Australia, New Zealand and Indonesia operations but sell of the UK and US assets. Ten will fund these businesses until they are divested and receive a share of the sale proceeds. Alternatively, it could reacquire them from Outdoor Media.
The transaction will enable Ten to pay down debt and strengthen its balance sheet.
Outdoor Media was reported to have entered into exclusive negotiations with Ten in May. The sale of Eye was widely expected ever since the company announced a strategic review of the business in March.
Eye's EBITDA fell 35.6% year-on-year in the first half of 2011-2012 to A$7.1 million, having been affected by difficult trading conditions in the pre-Christmas outdoor advertising market in Australia and New Zealand. Ten's television business posted a 40.2% decline in profit to A$56.8 million. Overall, the company saw its EBITDA fall by 39.7% over the period, to A$63.9 million.
CHAMP's acquisition of oOh!Media and Quadrant Private Equity's arrangement with APN News & Media - a A$272 million joint venture announced in February - point to a wider consolidation of the Australian outdoor advertising industry. This is driven by the amount of capital required to maintain sites and the duplication of supporting infrastructure among mid-sized players.
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