QMS gets $36m in merger

AUCKLAND: QMS Media will pocket $A35 million in a tieup with freetoair New Zealand broadcaster MediaWorks, despite the Australian outdoor advertising firm being the junior partner.

QMS and US private equity fund Oaktree Capital are merging their New Zealand operations, QMS New Zealand and MediaWorks.

QMS will receive a $A35 million ($NZ36.6 million) payment, subject to final adjustments in their financing agreement, and 40% of the merged entity, while Oaktree will own 60%.

That payment will largely extinguish a related party loan from QMS in Australia to its New Zealand holding company. At June 30, the New Zealand unit owed its parent $NZ38.1 million, paying annual interest of 3.75%. The loan was repayable on demand.

Adding QMS NZ’s outdoor advertising assets to Mediaworks’ existing suite of online, radio and TV advertising channels is expected to boost the media company’s 2019 earnings by $A12.8 million.

The deal is also expected to boost earnings for QMS from the 2020 financial year, once duplicated costs are stripped out and it coordinates its product offering.

QMS NZ generated ad revenue of $40.9 million in the June 2018 year, accounts filed to the Companies Office show. The New Zealand subsidiary generated a net profit of $4.3 million for QMS.

Meanwhile, MediaWorks’ latest accounts showed it had a loss of $5.7 million in calendar 2017.

The transaction is subject to various conditions, including Overseas Investment Office approval, and completion expected in the second quarter of next year.

QMS shares were unchanged at A95c on the ASX, having declined 5% so far this year. — BusinessDesk