Shares in advertising and media company HT&E Ltd (ASX: HT1) climbed 6% higher on Tuesday to $2.42, their highest price since September.
The price run follows media speculation – later confirmed by market updates from the companies involved – that oOh!Media Ltd (ASX: OML) and APN Outdoor Group Ltd (ASX: APO) launched competing bids to acquire Adshel, HT&E’s outdoor advertising business.
The series of announcements started Monday morning, with oOh!Media responding to media speculation that it had submitted a revised offer for Adshel following the rejection of a first proposal formulated in April. The company confirmed having raised its offer to $470 million.
In the space of three hours, HT&E Limited announced it had received multiple offers and oOH!Media’s wasn’t the most attractive. Negotiations with oOH!Media halted when the bidder turned down HT&E’s offer to provide further due diligence on a non-exclusive basis.
The identity of the second bidder was revealed a few hours later, when APN Outdoor Group confirmed it had submitted a non-binding proposal for Adshel. APN gave more detail on Tuesday, specifying the offer amounts to $500 million.
HT&E stated the board is willing to engage in any indicative proposal that delivers compelling value to shareholders. However, there is no certainty that any proposal will result in a binding offer capable of attracting support from the board, and HT&E might retain its outdoor business. The company appointed financial advisers CLSA Corporate Finance and Credit Suisse to assist in reviewing the proposals.
With so much interest around Adshel, both bidders fell on Tuesday’s trade. At the time of writing, Ooh!Media is down 2% to $5.34, and APN is down 3% to $5.14.
This takeover fever is good news for HT&E shareholders, as long as it keeps the stock buoying. However, I think they would be better off without divestments.
Competition is tough in the media sector since the advent of online advertising, and diversification and synergies are key to survival. HT&E is a diversified media outlet, and its radio network benefits from its outdoor advertising. Selling one could damage the other.
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