KKR could upset Quadrant’s QMS media acquisition plans

A QMS Media digital billboard for Yoplait yoghurt. Picture: Supplied

Kohlberg Kravis Roberts is believed to be weighing a rival takeover bid for QMS Media, scuppering plans by rival Quadrant Private Equity to acquire the outdoor advertising operation for $571.6 million.

It is believed that KKR and potentially others such as CPE Capital (formerly Champ Private Equity) are considering a move to wade into the contest for the group that also owns a major stake in New Zealand broadcaster MediaWorks.

At least one other buyout fund has considered a potential deal in the past.

MediaWorks owns a lucrative network of New Zealand radio stations and a free to air television broadcaster with channels such as TV3 and Bravo.

Any buyer of QMS would have a blocking stake when it came to a deal with MediaWorks, which is controlled by US-based Oaktree Capital Management.

A theory being discussed in market circles that Quadrant plans to also acquire MediaWorks as well as QMS, and then on-sell the MediaWorks assets, excluding television, to Nine Entertainment.

Nine Entertainment is understood to have looked at MediaWorks in recent months, but passed on the opportunity, with its loss making television business being a deterrent.

Now the television operation is up for sale separately through investment bank UBS, in what could be a move to clear the path for a deal with Quadrant and or Nine.

The television real estate assets are also on offer, however, which could be attractive to a buyout fund.

Quadrant is advised by Jefferies, which Nine Entertainment also counts as its adviser, while CLSA is working with QMS.

Moelis, along with UBS, is believed to be close to MediaWorks.

However, those plans could be thwarted if a higher bid for QMS emerges.

Private equity firms have been circling the Australian listed QMS since the beginning of the year.

On Tuesday, as anticipated, QMS announced that Quadrant has been planning to buy the company, offering $1.22 cash per share for the business.

QMS has backed the offer that values the business at $420.6m excluding debt and is a 36.3 per cent premium to its undisturbed share price on October 23.

The deal comes after The Australian’s DataRoom first reported on March 8 that private equity was circling QMS and after the column revealed on Friday that a private equity suitor was tipped to embark on a takeover of the company within days.

Quadrant’s move is just the latest in a spate of industry consolidation.

QMS finalised the acquisition of sports business TLA Worldwide in September and merged its New Zealand operations with MediaWorks.

Last year, French outdoor giant JC Decaux snapped up APN Outdoor for $1.12 billion and oOh! media acquired the outdoor operation Adshel from Here, There and Everywhere for $570m.

The deal also marks a return to the outdoor ad sector for Quadrant, which APN Outdoor before listing it on the ASX five years ago.

Last year, APN Outdoor was understood to have offered $1.50 per share for QMS before it was purchased by JCDecaux.