APN News & Media Falls 3% as Doubt Looms Over Merger

APN News & Media Ltd [ASX:APN] traded down 3% this morning, to a low of $2.34.

What happened to APN News & Media shares?

Yesterday, APN released slides from their 2017 Annual General Meeting. The company presented various ways they could grow their existing divisions, in addition to providing a trading update.

The company stated:

After four months of trading, APN Group revenues are in line with strong 2016 comparatives on a pro-forma basis. The radio market remained soft in March and April, on strong first half 2016 comps. ARN’s revenues YTD is behind expectations with the second half 2016 trend continuing into 2017. Further cost action has been taken, however earnings have been impacted by contracted cost increasing.

Nothing to warrant a share-price drop of 3%, right?

However, yesterday, the ACCC voiced their concerns over APN’s merger with oOh!Media Ltd [ASX:OML].

As reported by The Australian:

The $1.6 billion merger between oOh!Media and APN Outdoor is in danger of being rejected by the competition regulator, after it raised serious concerns about the deal and its impact on advertising prices and innovation in the sector.

The merger, if approved, would create for APN Outdoor and Ooh a national network of billboards, shopping centres, street furniture and digital sites.

But the Australian Competition and Consumer Commission has released a statement of issues and called on the industry to respond to its concerns that the tie-up between the two largest players in the out-of-home advertising market would irreversibly damage competition.

The ACCC has called on industry stakeholders to address its concerns by 19 May. A final decision on the deal will be released by the ACCC on 6 July, according to The Australian.

What now for APN News & Media?

Both APN and OML acknowledged the statements made by the ACCC. The Statement of Issues is a preliminary view by the ACCC, a spokesman for APN and OML said.

APN and OML will continue working with the ACCC with a view to addressing the matter it has raised today. We are currently considering next steps, including impacts on the proposed transaction timeline.

I don’t believe the merger will fall through. While the ACCC has their issues, APN seems determined to integrate OML into their business. APN has already said they are willing to demerge assets if necessary. I wouldn’t be surprised if they did some further cutting to appease the competition watchdog.


Härje Ronngard,

Junior Analyst, Money Morning

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