Here's why there's so much takeover activity in Australia's outdoor advertising market

Zak Kaczmarek/Getty Images for Coca-Cola The Kings Cross Coca-Cola sign.

The outdoor advertising market, the domain of billboards, bus stop marketing and digital signs, is running hot in Australia.

The sector is growing at a time when a lot of traditional advertising is declining, and now is in consolidation. It’s just hard to work out who will end up as the leading market player. APN Outdoor looks like it may be ahead of the rest.

APN Outdoor, which today announced an improved bid of $540 million for competitor Adshel, a street furniture business, is also under offer itself, a $1 billion takeover from global player JCDecaux SA, the France-based group.

Adshel also has another offer, at $470 million, from oOh!Media.

Last year APN Outdoor looked at merging with oOh!media to create a billboard advertising group with a market capitalisation of $1.6 billion.

However, the ACCC (Australian Competition and Consumer Commission) thought the merger would likely result in a substantial lessening of competition in out-of-home advertising services.

APN shares were down 1.7% to $6.445 today. The French are offering $6.52. oOh!media is down 0.5% to $5.36.

Analysts say the French offer is generous at 30% premium to APN’s six month average price.

The outdoor advertising market looks like this, according to analysis by Morgan Stanley:

Australia is the seventh largest advertising market worldwide, with a growing share of out-of-home advertising at 6% of advertising spend, of which almost 50% is digital.

“We see the outdoor market in Australia rising to 7% plus advertising share in the next few years being driven by increasing digital panel rollout (and taking market share from TV),” says Morgan Stanley in a note to clients.

The outdoor market grew at 6% in 2017. Outdoor industry ad revenues are up by 10% year to date in Australia.

APN’s largest revenue contributor is metro large-format Billboards and it also operates in metro Airports and metro Buses.

Here’s how outdoor advertising is growing in Australia:

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