KKR eyes QMS takeover as founder sells out

US-based global buyout fund Kohlberg Kravis Roberts was believed to have been sounding out QMS Media for an acquisition in the past two weeks, according to sources.

But it is not clear how appealing the target remains, with founder Barclay Nettlefold selling his shares to Quadrant Private Equity.

Quadrant is bidding $1.22 per share for the business, in an offer worth $571.6m including debt that has been recommended by the company’s board. The stake owned by Quadrant makes a deal difficult for another party.

Other groups are to be weighing their options, but trade players may be sitting on the sidelines.

Southern Cross Media is understood to have been looking at a bid for the company at between 90c and $1 per share, but is believed to have been rebuffed by QMS.

While it may be now considering another bid, the general view is that a recent profit downgrade means it is not in a strong position to go forward with an acquisition and probably thinks the company was overvalued at anything above its original offer in a weak and deteriorating advertising market.

Quadrant snapped up 14.85 per cent of QMS around the time that the bid was announced last week from interests linked to Mr Nettlefold and other members of management, such as John O’Neill.

Sources say the game plan for Quadrant is to recreate its success of APN Outdoor, owning the QMS Australian outdoor advertising assets, with little interest in the New Zealand MediaWorks broadcasting business, of which it owns 40 per cent.

Quadrant floated APN Outdoor on the ASX for a strong price, and the private equity firm will likely make bolt-on acquisitions for QMS.

Oaktree Capital Management owns the remainder of MediaWorks, which owns a radio network and a free-to-air television broadcaster with channels including TV3 and Bravo. Quadrant sources have denied speculation in the market about a plan to on-sell some MediaWorks assets to Nine.