QMS boss bats away suggestions of sale

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QMS boss bats away suggestions of sale

By Calum Jaspan

QMS Media chief executive John O’Neill has rejected suggestions the outdoor advertising company’s private equity owner, Quadrant, is looking to cash in as the sector goes from strength to strength.

Despite chatter in the market about potential interest in the business from new buyers, O’Neill told this masthead there is no sale in play and Quadrant would look to realise more value in the company before it looked to cash in on its 2019 investment.

The private equity firm made a cash bid for the ASX-listed company four years ago valuing QMS at more than $420 million, a deal ultimately backed by its board. 

A billboard in the middle of the al fresco dining destination of Dixon Street in Chinatown.

A billboard in the middle of the al fresco dining destination of Dixon Street in Chinatown.Credit: Steven Siewert

Since then, QMS won the most lucrative outdoor contract in Australia, the City of Sydney council with a 10-year contract worth $450 million. O’Neill has previously said the contract generates QMS $4 million to $5 million each month.

“They won’t leave anything on the table,” O’Neil told this masthead when asked about Quadrant’s view on the business, noting all parties were committed to continuing QMS’ growth. “Then they will look at it.”

While batting it away as “speculation”, O’Neill said a sale would make sense based on the nature of private equity investing. “They get in and get out.”

Jonathon Pearce, managing partner at Quadrant and QMS Group Chairman was approached for comment, but did not respond by the time of publishing.

QMS Media boss John O’Neill.

QMS Media boss John O’Neill.Credit: Nine

Outdoor advertising has rebounded after a difficult few years because of the COVID-19 pandemic, with June figures from Standard Media Index showing the sector to be the strongest performer, with ad revenues rising 23.9 per cent across the 12 months prior, to $1.2 billion.

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“Outdoor was easily the media most affected by COVID given the loss of more than $300 million in ad revenues between the 2018/19 and 2020/21 periods during the public lockdowns,” APAC managing director Jane Ractliffe said in a recent media release.

QMS Media street furniture.

QMS Media street furniture.Credit: QMS

O’Neill affirmed the market had rebounded, with the City of Sydney account “flying”.

The contract was held by French giant JCDecaux for more than 20 years, but QMS emerged as the surprise winner in 2020, as a much smaller, and newer player in the market.

It hasn’t been without problems, however, with controversy surrounding the rollout of its “communications pylons” and Sydney Lord Mayor Clover Moore launching a review into the placement of various sites at the end of 2022.

Despite its resurgence, the outdoor sector continues to stand on a precarious footing, with a subdued trading update from Cathy O’Connor, oOh!media’s CEO in May wiping almost $300 million off the company’s valuation.

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Since then, oOh’s share price has recovered and sits at $1.44 but remains below its pre-trading update price of $1.63.

For O’Neill, the next 12 months will be telling for the outdoor industry, touting acquisitions by the market’s three major players.

The sector has been active in the M&A space in the past decade, with blockbuster deals including JCDecaux acquiring APN Outdoor Group for $1.12 billion in 2018 and oOh!media purchasing Here There & Everywhere’s street furniture arm Adshel for $570 million in the same year.

A bid from Nine Entertainment (the owner of this masthead) was rumoured in 2022, with the company quashing speculation its chief executive Mike Sneesby had held talks with the digitally led outdoor company over a deal.

Nine is set to deliver its full year financial results on August 24, with its consolidated net debt as of December 31, 2022 sitting at $463.9 million. It declined to comment.

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