Acquisition of Adshel from HT&E and launch of capital raising through debt and equity: oOh!Media Ltd (ASX: OML) traded flat after an initial surge on June 25, 2018 as the company planned to acquire 100% of the share capital in Adshel from HT&E Limited (HT&E) for cash consideration of $570 million. The consideration value for acquisition is at EV/EBITDA multiple of 11.6x pre synergies, or 8.7x post synergies. The company expects the acquisition to complete in 2018 and after getting the ACCC approval. The acquisition purchase price is expected to be funded through a combination of new debt and an equity capital raising. Therefore, OML has undertaken a fully underwritten 1 for 2.3 pro rata accelerated non-renounceable entitlement offer to raise approximately $329.9 million (Entitlement Offer). Further, the company has arranged fully underwritten new debt facilities related with the Acquisition, with a total facility limit of $450 million (New Debt). The New Debt will be used to refinance existing OML debt, partly fund the Acquisition purchase price, and to retain flexibility for future capital expenditure and general corporate purposes. Moreover, this acquisition is expected to be low double digit EPSA accretive on a pro forma CY2018F basis for OML. Further, this includes the expected cost synergies but excludes one off integration costs and transaction costs. The cost synergies from the Acquisition are projected to be in the range of $15 – $18 million and are expected to be approximately 60% realised in 2019 and fully realised in 2020. These synergies are anticipated to predominantly comprise savings from leveraging combined infrastructure with duplicated resource rationalisation and reducing outsourcing costs. Additionally, approximately 72 million new fully paid ordinary shares in OML (New Shares) are expected to be issued under the Entitlement Offer, which represents approximately 44% of OML’s current issued capital, at a price of $4.60 per New Share (Offer Price). In addition, the Offer Price will be 14.0% discount to the closing price of OML ordinary shares on ASX on the last day of trading before announcement of the Entitlement Offer, being $5.35 and will be 10.2% to the theoretical ex-rights price (TERP) of $5.12 reflecting the Entitlement Offer.
Equity raise indicative timetable (source: Company Reports)
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