CHAMP PE-backed oOh!media walks away from Eye Corp buyout
CHAMP Private Equity’s oOh!media portfolio company has decided not to proceed with its buyout of Eye Corp, Ten Network Holdings’ outdoor advertising business. This comes despite Ten’s denial earlier this week that the acquisition price would be lowered due to concerns about the outdoor advertising business’ financial performance.
Ten said that negotiations over a deal on "amended" terms continue with Outdoor Media Operations (OMO), oOh!media's parent company, but that it is also considering legal options.
The collapsed deal valued Eye at up to A$145 million ($148 million), of which A$120 million was to be paid in cash on completion, with the remainder due in three years' time. But this figure was claimed to be optimistic this week after CHAMP queried Eye's financials.
OMO was bought by CHAMP late last year. It planned to retain Eye's Australia, New Zealand and Indonesia operations but sell off the UK and US assets. The transaction would have enabled Ten to pay down debt and strengthen its balance sheet.
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.
Nevertheless, it's highly likely that either CHAMP or another private equity firm will ultimately decide to snap up Eye, given the highly persuasive growth prospects for outdoor advertising in Australia.
According to PricewaterhouseCoopers' (PwC) latest Global Entertainment and Media Outlook, out-of-home advertising in Australia increased by 3.7% in 2011 to reach $510 million. The market is expected to grow by 5% compounded annually to $650 million in 2016.
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