Ocean Outdoor Ltd

Acquisition of Visual Art

RNS Number : 3597M
Ocean Outdoor Limited
16 September 2019
 

 

 

Ocean Outdoor Limited

 

Acquisition of Visual Art Strengthens European Digital Platform

 

London, United Kingdom, September 16, 2019 - Ocean Outdoor Limited (LSE: OOUT), ("Ocean Outdoor", "Ocean", or "the Company") has acquired Visual Art ("Visual Art"), a Sweden based independent, pure-play digital, out-of-home media and tech group operating in three Nordic countries and Germany. 

 

The deal is structured as two simultaneous transactions in which Ocean (i) acquires the out-of-home assets of Visual Art ("Visual Art Media") for a total consideration of approximately €63 million in cash and (ii) partners with the operators of Visual Art to form a 50-50 digital signage technology joint venture ("Visual Art Technologies") following a €15 million investment by Ocean.

 

Visual Art Media

 

The acquisition of Visual Art Media extends Ocean's digital out-of-home ("DOOH") presence into Northern Europe adding Sweden, Denmark, Finland and Germany to the company's premium DOOH portfolio operating in the UK and the Netherlands.

 

Visual Art Media is Sweden's largest pure-play digital out-of-home operator with more than 260 locations across a mix of retail, rail, airport and leisure destinations in 41 key cities including Stockholm, Gothenburg and Malmö.  In addition to Sweden, which represents approximately 85% of 2019E revenue, the company operates emerging growth businesses in Denmark, entered Finland in 2018 and signed a retail OOH partnership with Unibail-Rodamco-Westfield Germany in December 2018 in 15 shopping malls including Berlin and Munich. 

 

Visual Art Media's combined portfolio is approximately 95%(1) digital today.  The company, which employs 140 people with offices in seven countries, will continue to operate under its management team led by CEO Andreas Lind, supported and powered by the Ocean brand.

 

For the full year ending 2019, it is estimated that the business will generate approximately €29 million of revenue and €6 million of EBITDA(2).  This follows 2017 and 2018 revenue of €22.2 million and €25.4 million respectively, a 2017A-2019E revenue CAGR of 13% (based on unaudited accounts), and 2017 and 2018 EBITDA of €3.6 million and €4.4 million respectively, a 2017A-2019E EBITDA(2) CAGR of 27% (based on unaudited accounts).

 

The entry into these markets through Visual Art's high growth digital portfolio is a natural extension of Ocean's Digital Cities for Digital Citizens out-of-home philosophy into highly attractive geographies at the forefront of technological and digital innovation.  Sweden in particular, as Visual Art Media's core driver, along with Denmark and Finland, have similarly strong underlying industry dynamics to the UK and the Netherlands. 

 

Visual Art Media's partnership with Unibail-Rodamco-Westfield in Germany compliments Ocean's long term partnership with an important landlord.  In the UK, Ocean holds exclusive external rights to two of the largest premium urban shopping malls in Europe, Westfield London and Westfield Stratford. The Visual Art partnership in Germany allows it to operate 400 DOOH faces in 15 shopping centres.  

 

Visual Art will receive total consideration of approximately €63 million(2) in cash for Visual Art Media, and a performance-linked earn-out if growth performance targets are met overtime for Denmark, Finland and Germany collectively.  Ocean expects the delivery of performance targets and group-wide synergies to further enhance this transaction.  The transaction values Visual Art Media at a 31 December 2019E multiple of approximately 10.0x EBITDA(3).

 

Visual Art Technologies

 

Visual Art Technologies designs, produces, installs, broadcasts and operates cutting edge, high tech-enabled digital signage systems globally.  The business operates in 24 countries, with over 4,300 locations and over 25,000 screens for clients in all sectors, including food, fashion, finance, automotive, telecom, hospitality, and pharma, amongst others.

 

For the full year ending 2019E, it is estimated that the business will generate approximately €18 million of revenue(2).  It is also estimated that over the medium term the joint venture's profitability should approach approximately 20% EBITDA margins, on the back of growth investments being made today.

 

Through its €15 million investment, Ocean will own 50% of Visual Art Technologies in a joint venture with the former owners of Visual Art to create a complementary, and high growth, tech business line that will drive significant synergies and opportunities across the full out-of-home and signage portfolio.  The combination of Visual Art Technologies' dynamic product set, creativity and high quality client base (including leading brands such as McDonald's and H&M, amongst others), coupled with Ocean's digital out-of-home expertise, provides a unique symbiotic relationship to drive meaningful commercial opportunities for both businesses globally.

 

The board of the joint venture will be comprised of two representatives from each of Ocean and the former owners of Visual Art.  Certain matters will require unanimous approval from both parties representatives and the parties have agreed to certain restrictions on transfers of interests in the joint venture. 

 

Commenting on the transactions, Ocean CEO Tim Bleakley said: "Visual Art Media is an attractive business that we have long admired. The company combines great people with great assets in growing DOOH markets, offering impressive opportunities across a number of different business areas and multiple countries.

 

"This acquisition creates an enhanced offering which benefits all stakeholders, landlords, municipalities and advertisers along with the media and specialist agencies. We look forward to working with the management teams at Visual Art to combine their expertise with the Ocean brand and our digital cities for digital citizens philosophy."

 

The transactions are funded through Ocean's cash on hand and are immediately materially accretive to free cash flow and EPS, reflecting the attractive standalone growth potential of the assets, even before the benefit of potential group-wide synergies. 

 

Ocean continues to see additional attractive uses to deploy capital through M&A, and these transactions further reinforce Ocean's focus on its three core strategic tenets of driving organic growth, technical innovation and accretive inorganic consolidation.

 

The company will provide further feedback with the release of its H1 2019 financial results and on its earnings conference call today at 1.00pm BST / 8.00am ET.

 

 

(1) Digital revenues as a percent of all media revenues for H1 2019

(2) Converted at YTD average EURSEK of 10.55

(3) Based on Sweden and Denmark Media EBITDA

 

 

ENDS

 

For further information please contact:

                                                                                               

 

Ocean Outdoor

020 7292 6161

Tim Bleakley, CEO

Susann Jerry, Head of Communications

 

 

 

Yellow Jersey PR

07747 788 221

Charles Goodwin, Georgia Colkin, Joe Burgess

 

 

 

 

About Ocean Outdoor Limited

 

Ocean Outdoor operates some of the most prestigious digital out-of-home (DOOH) locations in the UK and Europe.  In the UK, Ocean continues to execute its three-pillar strategy, delivering good organic development following new city tender wins in Glasgow and Southampton, the rollout of new locations and screen investment.

 

The UK portfolio includes London's Holland Park Roundabout, which forms part of the Company's exclusive external rights to two of the largest premium urban shopping malls in Europe, Westfield London and Westfield Stratford; The Birmingham Media Eyes above New Street Station, Birmingham; Piccadilly Lights, owned by Landsec; and DOOH networks across the top 12 UK cities including Birmingham, Manchester, Newcastle, Liverpool, Leeds, Glasgow and Edinburgh. Ocean also manages London's BFI IMAX. Ocean's portfolio of high-profile landlords and partners includes Birmingham, Manchester, Glasgow and Southampton City Councils, Landsec, Westfield, the BFI and intu.

 

The integration of Ocean Scotland (formerly Forrest Outdoor Media) and a continued focus on Ocean's Digital Cities for Digital Citizens philosophy has significantly augmented the Group's position as an operator of high quality DOOH assets.

 

Strategic acquisitions that complement the existing DOOH portfolio remain a key pillar of the growth programme. This continued with three Dutch acquisitions in spring 2019, giving the company a significant share of the Netherlands market where it has become a major DOOH player.

 

About Visual Art

 

Visual Art is an international technology and media group with headquarters in Stockholm, and with offices in the Nordic countries, Germany, Spain and the USA. The company was founded in 1997 and has more than 140 employees. The business idea is to be a strategic partner to its clients through

tech innovation and business driven digital communication. The digital network consists of more than 25,000 screens operating in 24 countries around the globe.

 

Visual Art Group helps global customers to create sustainable and future-proof communications solutions. Intelligent menu boards at McDonald's in the Nordics and Europe, voice-controlled interactive digital mirror in the H&M-store at Times Square, giant LED at the Mall of Scandinavia shopping center in Stockholm and digital outdoor advertising in the Nordic region - Visual Art Group has a broad range in its offer. Selection of clients: McDonald's, ICA, H&M, Circle K, 7-Eleven, Volvo, Coca-Cola, Emirates, Zalando, Daniel Wellington, iZettle, Nike and Disney.


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