QMS NZ proposed merger with MediaWorks

QMS Media Limited (ASX: QMS) today announces that it has entered into a Heads of Agreement (HOA) for a proposed merger of its New Zealand out-of-home, digital media and production business (QMS NZ) with MediaWorks, New Zealand’s leading independent radio, TV and digital business. The transaction is subject to agreeing final binding terms as well as several customary conditions and is expected to complete in the second quarter of CY 2019.

Proposed Transaction Highlights

• The proposed merger would see QMS merge its NZ out-of-home, digital media and production businesses into MediaWorks and in return will receive a material but not controlling share of the company in the expanded MediaWorks business, with funds managed by Oaktree Capital Management, L.P retaining a majority.
• Transformational multi-media provider across four platforms, delivering the combined power of out-of-home, radio, TV and digital, with a strong localised presence and experienced leadership.
• The proposed combined sales network will maximise revenue synergies and deliver strong cash flow to the group.
• The transaction is subject to agreeing final binding terms as well as several customary conditions and is expected to complete in the second quarter of CY 2019.

The proposed merger of QMS NZ and MediaWorks would create the largest multi-media group in New Zealand, a first in this market to realise the combined power of out-of-home, radio, TV and digital as an unrivalled destination for advertisers to build brands and maximise audience reach. This future view of the media industry is consistent with recent international trends that place additional significant value on the power of multi-media ownership.

The proposed merged group will deliver compelling value for advertisers via an expanded sales network and complementary cross-stream revenue synergies.

Jack Matthews, Chairman of MediaWorks, added: “Under Michael Anderson’s leadership MediaWorks has made great strides over the past two years. With this proposed merger, MediaWorks will be able to further enhance its ability to deliver high quality local content and more effective advertising solutions to our customers. It will represent a significant investment in and commitment to New Zealand.”

QMS is being advised on this transaction by CLSA and Chapman Tripp.