Ad firm oOh! Media cuts float size and price

ADVERTISING company oOh! Media has cut its initial public offering price by more than 20 per cent.

JUST days after online sportswear retailer SurfStitch lowered expectations about pricing and initial public offering size, advertising company oOh!media cut its IPO price by more than 20 per cent.

Combined with a lacklustre market debut for Medibank Private, the oOh!media move adds to concerns about whether Australia’s IPO market bull run is beginning to lose momentum.

It is understood that oOh! media, owned by Champ Private Equity, has repriced its IPO to $1.93 per share from a previous indicative range of $2.45-$2.85, due to softer sentiment in the market. The billboard company is now looking to raise $169.3 million in the IPO, down from the previous target of between $226.8m to $247.6m.

The company’s major rival, APN Outdoor, also further sank below its $2.55 stock issue price yesterday.

For oOh!media, the new price values the company at 7.5 times forward EBITDA (earnings before interest, taxes, depreciation, and amortisation) and represents a dividend yield of 3.8 per cent.

The initial range implied 8.2 times to 8.8 times EBITDA, which would have valued the company between $400.3m and $430m. Champ will retain its holding and is not selling any stock in the IPO, although it previously intended to sell between 24.1 million and 26.5 million of shares.

Meanwhile SurfStitch yesterday confirmed it had raised $83m in a bookbuild for its plannedIPO.

The funds for the online surfwear retailer were raised at $1 a share, which gives the company a market capitalisation of $218m. The initial target was about $110m with an indicative price range of $1.40-$1.80 per share.

SurfStitch was formerly majority-owned by troubled surfwear retailer Billabong. In August, a consortium of investors, including the founders, agreed to buy Billabong’s 51 per cent stakes in SurfStitch Australia and SurfStitch Europe, together with Billabong’s 100 per cent ownership of Swell.

The company expects to list on December 16.