Sale Talks For News Outdoor Dropped

JCDecaux scrapped talks to buy News Outdoor Group, News Corp.'s Russian billboard unit, an acquisition which would have created the world's largest billboard advertising group, as the credit crunch made it impossible to fund the deal.

Europe's largest outdoor advertising group had said as recently as last week that it was pursuing its plan to buy News Outdoor Group, the Russian outdoor ad unit of billionaire Rupert Murdoch's News Corp., in a potential cash and shares deal.

Moscow-based News Outdoor is the sixth-largest out-of-home advertising company in the world, according to its web site. Newspapers put a value of more than $1 billion on the unit.

However, the two groups said matters had changed.

"Both companies recognize that economic and capital market conditions have made it increasingly difficult to conclude strategic partnerships on this scale," they said in a joint statement Tuesday, a month after first revealing the talks.

Asked whether the freezing-up of bank finance was the reason behind the decision, a JCDecaux spokeswoman said: "You can say that, yes."

Murdoch has expressed nervousness about investments in Russia, where News Outdoor generated the bulk of its revenues -- $385 million last year.

"We have great growing business there, but ... this is purely me, I'm sorry, the more I read about investments in Russia, the less I like the feel of it," Murdoch told reporters in August.

Investigators briefly closed News Outdoor's Moscow offices in September to search for evidence of criminal activity by a Moscow city official, according to the company, which said it was not the target of any investigations.

JCDecaux had been keen to expand in emerging markets, where News Outdoor was strong, particularly in Russia.

A combination of the two businesses would have created a company with annual sales of about $3.3 billion, topping world leader Clear Channel Outdoor.

The company's co-chief executive, Jean-Charles Decaux, said last week that the group was pursuing talks with News Corp. despite the financial crisis, as News Outdoor was a quality asset and the sector needed to consolidate. The crisis did "not fundamentally challenge the analysis" it was conducting, he said, adding that it was carrying out due diligence.

"How can you even talk valuations in the current Russian stock market?" one analyst asked, referring to the sharp falls in Russian stocks and wave of trading suspensions.

News Corp. said in June 2007 it was mulling strategic options for News Outdoor including expanding its existing shareholder group through new strategic and private equity partners.

Reuters, MT