SYDNEY — Australia’s Television & Media Services is bidding to become one of the world’s largest cinema advertising contractors after lodging a takeover bid Tuesday for Media Entertainment Group.
TMS’ bid values MEG, which operates in Australia, New Zealand, Fiji, Argentina, Singapore and Hong Kong, at $A40 million ($21.2 million), a 38% premium over its market capitalization.
TMS already owns nearly 20% of MEG and is the largest shareholder alongside Kerry Packer’s Consolidated Press Holdings, also with 20%.
Val Morgan & Co., a wholly owned subsid of TMS, has cinema advertising operations in seven countries, including contracts with 4,000 screens in the U.S.; it’s the largest such firm in Australia.
Combining the two businesses would give TMS interests in 10 countries, offering cinema advertisers a “one-stop shop,” TMS chief exec Bruce Fink told Daily Variety.
A merger would create a virtual monopoly in Australia, but Fink contends that would not be anti-competitive. “Cinema advertising’s competition is TV, radio and newspapers; it is not MEG vs. Val Morgan,” he argued.
“We are sensitive to (concerns about a monopoly), which is why we had a preliminary meeting with the Australian Competition & Consumer Commission prior to making the bid,” Fink added.
TMS’ offer is conditional on 90% acceptance by shareholders; company’s offering one of its shares for every five MEG shares.