APN News and Media is taking full ownership of Adshel, with its network of digital street advertising screens, for $268.4 million.
The move is part of APN’s business transformation from a traditional newspaper publisher to an outdoor advertising giant, where industry growth is running at 17% a year.
Adshel was formed in 1997 as a joint venture between APN and advertising group Clear Channel. APN is buying the 50% it doesn’t own from a subsidiary of Clear Channel.
Adshel has the number one position in street furniture advertising space in Australia and New Zealand with 22,000 static and digital panels.
The company started a digital roll-out last year. There are 366 digital screens in Australia and through Adshel Rail, there are another 186 digital screens across the Sydney train network.
APN CEO Ciaran Davis says the acquisition places the company in a stronger position by creating a unique proposition to deliver an integrated radio, outdoor, mobile and video offering.
“As the demands of advertisers rapidly change, this transaction will increase the effectiveness of implementing integrated marketing campaigns at scale, across all of APN’s businesses,” he says.
In the 12 months to June, Adshel generated revenue of $170 million and EBITDA (earnings before interest, tax, depreciation and amortisation) of $42 million.
The acquisition will be initially funded by debt, to be repaid by an equity raising of $273 million.
APN is selling its print business, Australian Regional Media, to News Corp for $36.6 million. The sale includes 12 regional daily newspapers in New South Wales and Queensland, 60 community newspapers and over 30 regional news websites.
In August, the company posted a half year loss of $256.9 million. The statutory net loss after income tax compared to a profit of $7.5 million in 2015. Revenue was flat at $129.1 million, down 0.2%.