Nine chases NZ media assets in QMS carve-up

A QMS Media digital billboard for Yoplait.

Nine Entertainment could be looking to bolster its market share in the New Zealand media industry as the company struggles to find a buyer for its newspaper interests across the Tasman.

Nine, which is restructuring following its $4bn merger with Fairfax Media in December, may look to pick up some of QMS Media’s assets after the outdoor advertising group on Tuesday recommended a $571.6m takeover bid from Quadrant Private Equity.

QMS owns 40 per cent of MediaWorks. The game plan for Quadrant is to secure control of MediaWorks, which is majority-owned by Oaktree Capital, carve up the company and sell off assets to Nine.

Nine, which declined to comment, is believed to be interested in the profitable MediaWorks radio business that includes The Edge, The Breeze and Magic, and potentially the QMS outdoor advertising assets that include digital and traditional billboards.

If Nine secures a radio business in NZ it would have a similar portfolio to rival NZME, which owns APN NZ, The Radio Network and GrabOne.

Nine has had its New Zealand publishing and digital business Stuff on the market for most of the year.

However, Quadrant could be gazumped, with Kohlberg Kravis Roberts and other parties such as CPE Capital Partners believed to be weighing rival bids for QMS, as reported by DataRoom online on Tuesday

Oaktree is understood to have been eager to sell MediaWorks for some time, but buyers have been deterred by the loss-making free-to-air television division, which owns channels such as TV3 and Bravo.

Nine Entertainment is understood to have looked at MediaWorks in recent months, but passed on the opportunity, with the loss-making TV business 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.

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

Boutique advisory firm Moelis and UBS are believed to be close to MediaWorks.

Meanwhile, QMS shares soared 22 per cent to $1.235 on Tuesday after announcing the $1.22 cash offer from Quadrant. The deal values the business at $420.6m, excluding debt, and is at a 36.3 per cent premium to its share price on October 23, before media speculation of an impending bid started to swirl.

QMS, which was founded by chief executive Barclay Nettlefold, includes Omnigraphics, MMT Print, INsite Media and BMG.

Quadrant’s move is just the latest in a spate of industry consolidation, including QMS’s acquisition of sports business TLA Worldwide in September, with its New Zealand operations merged with MediaWorks.

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

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

Quadrant partner Jonathon Pearce said QMS had a proven track record of delivering sustainable growth, which bodes well for its future.

“Under Barclay’s continued leadership and with Quadrant providing additional capital, we believe the business will continue to grow and deliver innovative market-leading solutions to customers across the Australia & New Zealand Media and Global Sports divisions,” Mr Pearce said.

Mr Nettlefold said the deal “represents an excellent outcome for our shareholders, partners and employees”.

“It is a testament to our sustained growth in a challenging market, and our continued market-leading digital revenue contribution, led by our strong and experienced executive management team.”

In addition to the offer, shareholders will also be entitled to a final dividend of up to 1.3c a share for the year ending December 31, subject to QMS board approval.