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Ocean Outdoor Ltd (OOUT)

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Thursday 21 November, 2019

Ocean Outdoor Ltd

AdCityMedia Strengthens Nordic Digital Platform

RNS Number : 1349U
Ocean Outdoor Limited
21 November 2019
 

This press release contains selected, consolidated information about the Offer and does not replace the offer document which was published on 21 November 2019 and is available at Ocean Outdoor's website www.oceanoutdoor.com. The information in this press release is not complete and the offer document contains additional information. The Offer is not being made, and this press release may not be distributed, directly or indirectly in or into, nor will any tender of shares be accepted from or on behalf of holders in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States, or any other jurisdiction in which the making of the Offer, the distribution of this press release or the acceptance of any tender of shares would contravene applicable laws or regulations or require further offer documents, filings or other measures in addition to those required under Swedish law.  

 

Ocean Outdoor Limited

 

Recommended Cash Offer to the Shareholders of AdCityMedia Strengthens Ocean's Nordic Digital Platform

 

London, United Kingdom, November 21, 2019 - Ocean Outdoor Limited (LSE: OOUT), ("Ocean Outdoor", "Ocean", or the "Company") has announced a recommended public offer (the "Offer") to the shareholders of AdCityMedia AB ("AdCityMedia" or "ACM") to acquire all of the outstanding shares in AdCityMedia in a 100% cash transaction.  AdCityMedia, listed on the Nasdaq First North Growth Market, is a Sweden based independent, premium out-of-home and digital screen tech operator focussed in large format digital and high end city centre locations across Sweden, Norway, Denmark and Finland.  At the offer price of SEK 165 per share, the transaction represents a transaction value of approximately SEK 308.3 million, or £24.7 million (at spot FX). 

 

On the back of the acquisition of Visual Art ("Visual Art") in September, the acquisition of AdCityMedia will extend Ocean's premium digital out-of-home ("DOOH") presence in Sweden, Denmark and Finland to create an enhanced digital operator in these regions, differentiated by an ability to deliver high quality and innovative campaigns to advertisers and brands, and will leverage a further scaled regional platform to generate operating efficiencies and economies of scale.  The acquisition also sees Ocean enter the Norwegian out-of-home market through ACM's established portfolio of assets.

 

AdCityMedia is a premium out-of-home operator focussed in large format digital & high end city centre locations in Sweden and Norway with approximately 1,500 locations and approximately 4,500 digital screens across a mix of retail and leisure destinations in key cities including Stockholm, Gothenburg, Malmö and Oslo as well as other key urban and rural locations.  Sweden represents approximately 80% of 2018 media revenue(1).  ACM's out-of-home portfolio is approximately 72%(2) digital today in Sweden and approximately 62%(2) digital in total. 

 

ACM also operates digital signage solutions across the Nordics.  The business supports retail customers to manage their own media channels through digital in-store screens with high-tech functionality or large format advertising on facades.  The technology business of ACM represents approximately 24%(3) of the total company. 

 

Following the completion of the Offer, Ocean intends to integrate AdCityMedia with Ocean's existing operations in the Nordic regions and beyond.  The transaction is expected to deliver integration benefits, which once realized, could enable the combined entity to be more competitive through a combination of an expanded portfolio, combined talent and deeper market coverage.

 

Ocean appreciates the important role played by AdCityMedia's employees.  To realize the integration benefits discussed above, the integration of AdCityMedia and Ocean will likely entail some changes to the organization, operation and employees of the combined group.  The specific initiatives to be implemented will be determined following completion of the Offer pursuant to a detailed review of the combined businesses.  Before completion of the Offer, it is too early to say which initiatives will be taken and the impact that these would have.  There are currently no decisions on any changes to Ocean's or AdCityMedia's employees, management or existing organization and operations of AdCityMedia, including terms of employment and location of business.

 

For the full year ending 2019, it is estimated that the business will generate approximately SEK205 million of revenue or £16.5 million (at spot FX) and SEK27.1 million of EBITDA(4) or £2.2 million (at spot FX).  This follows 2018 revenue of SEK189 million, or £15.2 million (at spot FX) or 8.6% year on year growth (based on unaudited accounts), and 2018 EBITDA of SEK23.3 million, or £1.9 million (at spot FX), or 16.3% growth (based on unaudited accounts).

 

In addition to the strong underlying standalone organic growth prospects of AdCityMedia, this transaction provides meaningful commercial synergy and economies of scale across the ACM & Visual Art businesses to unlock value and fuel future growth with greater profitability.  The synergies are expected to generate approximately SEK12.5 million per year, or £1.0 million (at spot FX), in addition to revenue benefits driven by the enhanced asset portfolio expected by the second year post completion.

 

The transaction values AdCityMedia at a 2020E multiple of 6.9x EBITDA(5), adjusted for year twosynergies before integration costs (and before commercial synergies), and 9.6x EBITDA(5) before synergies.

 

The transaction will be funded through Ocean's cash on hand and is immediately accretive to free cash flow and EPS, reflecting the attractive standalone growth potential of the assets and meaningful synergies available in the combination. 

 

Shareholders in AdCityMedia representing approximately 51.2% of the shares and votes in AdCityMedia have irrevocably undertaken to accept the Offer.  Completion of the Offer is conditional upon, inter alia, the Offer being accepted to such an extent that the Offeror becomes the owner of shares representing not less than 70% of the share capital and votes in AdCityMedia.  An offer document regarding the Offer is expected to be published on 21 November 2019 and the acceptance period for the Offer is expected to start on 25 November 2019 and the first closing date is anticipated to be on 16 December 2019.  Payment of the consideration is expected to commence on or about 20 December 2019.  The independent directors of the board of AdCityMedia have unanimously resolved to recommend the shareholders in AdCityMedia to accept the Offer.

 

Commenting on the transaction, Ocean CEO Tim Bleakley said: "We have known ACM via our Alliance network for some years now and have always admired Anders and the team's ambition and dedication to promoting the evolution of DOOH across Sweden and the Nordics. The combination of these assets with those of Visual Art and the coming together of talented ambitious management with a dynamic creative and innovative approach is compelling. This is an exciting prospect for all stakeholders across the Nordic countries and will be hugely positive for landlords, media agencies and advertisers."

 

 

(1) Based on Company information

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

(3) Technology revenue as a percent of total revenue for 2018A

(4) All numbers are PF for the acquisition of Prego in 2018 and the sale of Bitlogic in 2019 for comparability. All EBITDA numbers are before IFRS 16 adjustments.  2019 numbers are based on current analyst consensus estimates, pre Q3 results

(5) 2020E EBITDA is calculated using EBITDA based on current analyst consensus, pre Q3 results, estimates for ACM of SEK33.0 million, which is adjusted to exclude the benefit to EBITDA of IFRS 16

 

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 outdoor 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 digital out-of-home (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 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. The acquisition of AdCityMedia represents Ocean's sixth acquisition since March 2018 (when Ocean was acquired by Ocelot, the vehicle founded by LionTree and Andrew Barron).

 

About AdCityMedia

 

AdCityMedia helps companies and brands to be visible.  With its two business sectors Media and Retail Tech, AdCityMedia gives visibility to messages in indoor and outdoor environments that reach hundreds of thousands of people every day.

 

With 19 years of experience in the business sector, Media is today the market leader in the digital, large format advertising, outdoor environment sector.  Since 2015, AdCityMedia have increased fivefold sellable media space covering digital media surfaces in city environments.  The outdoor advertising market is growing and the transition from analogue to digital is happening at a fast pace, for which AdCityMedia has been a driving force in digitalization for several years.  Media has four main orientations; "Digital large format screens", "Banners", "Everyday goods trade" and "Billboards".

 

Within the business sector Retail Tech, AdCityMedia's mission is to strengthen retail vitality while the market is going through major transformations.  By helping store owners to evaluate their own media opportunities on both façades and in-store, visibility can be increased, new revenue opportunities created and business activities developed.  Retail Tech has two main orientations: "Digital Signage" (digital screens in store environments) and "Production" (analogue large format advertising).

 

Digital is the future and AdCityMedia currently has approximately 1,500 locations as well as over 4,500 digital screens in its network with which the company creates strategy and drives content and support for its clients. The company is innovative and has the cutting-edge technology and skills required to be at the forefront, which are good preconditions to profit from market growth.

 

 

About Visual Art

 

Visual Art, acquired by Ocean in September 2019, 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.

 

 

Important information

The Offer, pursuant to the terms and conditions presented in this press release, is not being made to persons whose participation in the Offer requires that an additional offer document is prepared or registration effected or that any other measures are taken in addition to those required under Swedish law.

 

This press release and any related Offer documentation are not being distributed and must not be mailed or otherwise distributed or sent in or into any country in which the distribution or offering would require any such additional measures to be taken or would be in conflict with any law or regulation in such country - any such action will not be permitted or sanctioned by Ocean Outdoor. Any purported acceptance of the Offer resulting directly or indirectly from a violation of these restrictions may be disregarded.

 

The Offer is not being and will not be made, directly or indirectly, in or into, by use of mail or any other means or instrumentality of interstate or foreign commerce of, or any facilities of a national securities exchange of Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States. This includes, but is not limited to facsimile transmission, electronic mail, telex, telephone, the Internet and other forms of electronic transmission. The Offer cannot be accepted and shares may not be tendered in the Offer by any such use, means, instrumentality or facility of, or from within Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States or by persons located or resident in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States. Accordingly, this press release and any related Offer documentation are not being and should not be mailed or otherwise transmitted, distributed, forwarded or sent in or into Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States or to any Australian, Canadian, Hong Kong, Japanese, New Zealand, South African, Swiss or U.S. persons or any persons located or resident in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States.

 

Any purported tender of shares in the Offer resulting directly or indirectly from a violation of these restrictions will be invalid and any purported tender of shares made by a person located in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States or any agent, fiduciary or other intermediary acting on a non-discretionary basis for a principal giving instructions from or within Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States will be invalid and will not be accepted. Each person who holds shares and participates in the Offer will certify to not being an Australian, Canadian, Hong Kong, Japanese, New Zealand, South African, Swiss or U.S. person, not being located or participating in the Offer from Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States and not acting on a nondiscretionary basis for a principal that is an Australian, Canadian, Hong Kong, Japanese, New Zealand, South African, Swiss or U.S. person, or that is located in or giving order to participate in the Offer from Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States. Ocean Outdoor will not deliver any consideration relating to the Offer to Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States. This press release is not being, and must not be, sent to shareholders with registered addresses in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States. Banks, brokers, dealers and other nominees holding shares for persons in Australia, Canada, Hong Kong, Japan, New Zealand, South Africa, Switzerland or the United States must not forward this press release or any other document related to the Offer to such persons. For purposes of this section, "United States" and "U.S." refers to the United States of America (its territories and possessions, any state of the United States and the District of Columbia).

 

Regardless of the previous, Ocean Outdoor reserves the right to approve that the Offer is accepted by persons not present or resident in Sweden if Ocean Outdoor, in its own opinion, assesses that the relevant transaction can be carried out in accordance with applicable laws and regulations.

 

This press release contains selected, consolidated information about the Offer and does not replace the offer document which was published on 21 November 2019 and is available at Ocean Outdoor's website www.oceanoutdoor.com. The information in this press release is not complete and the offer document contains additional information.

 

To the extent permissible under applicable law or regulation, Ocean Outdoor or its brokers may purchase, or conclude agreements to purchase, shares in AdCityMedia, directly or indirectly, outside of the scope of the Offer, before, during or after the period in which the Offer remains open for acceptance. This also applies to other securities which are directly convertible into, exchangeable for, or exercisable for AdCityMedia shares, such as warrants. These purchases may be completed via a market place at market prices or outside a market place at negotiated prices. Any information on such purchases will be disclosed as required by law or regulation in Sweden.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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