After selling its dusty regional newspaper business earlier this year, APN News and Media is snapping up video-heavy digital content sites aimed at millenials and frequent sharers.
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It has also announced a buyout of Adshel for $268.4 million. APN already owns half of Adshel, a company it started in 1997 with co-owner US-based Clear Channel Outdoor.
This means APN now owns 22,000 advertising panels across Australia and New Zealand, radio stations and three websites aimed at young readers.
Full ownership will allow APN to accelerate plans to convert 1500 panels to digital in the next three years.
"Adshel is behind competitors on digital," APN chief executive Ciaran Davis told BusinessDay.
"Australia was a market that [Clear Channel] were not particularly willing to invest in for a period of time."
The deal is not subject to any conditions and was expected to be completed within one day.
APN will use a bridging loan to buy out Clear Channel on Tuesday. It will repay the loan by raising $273 from retail and institutional shareholders by issuing 111.5 million new shares, taking total shares on issue to 207.5 million shares.
APN will also buy Conversant Media for $11.6 million. Conversant runs pop-culture website Lost at E Minor, sports site The Roar, and millennial-tech and lifestyle website, Techly.
"The business model of [Conversant Media] is that all the revenue is digital," Mr Davis explained. The deal also increases APN's exposure to younger audiences and sports fans.
About 70 per cent of Conversant's content is consumed on mobile, which Mr Davis ties in with APN's other out-and-about assets, Adshel and radio.
Conversant was founded by Zac and Zolton Zavos, and backed by former Health Communication Network managing director, Mike Gregg.
APN recently sold out its regional newspaper publisher, Australian Regional Media, to News Corporation for $37 million. ARN owns 76 printed newspapers distributed across Queensland and 60 websites. The deal still requires regulatory approval, with the competition watchdog recently raising concerns about its impact on prices and content.
The purchase price for Adshel is 12.7 times earnings, based on its 12 month performance to June. APN provided a trading update with a positive outlook for Adshel, but a question mark over its radio stations.
Chief investment officer at Allan Gray, Simon Mawhinney, said it was yet to be proven if $268.4 million is a good price.
APN management "need to live and die by these decisions", he added.
"If the company is going to make an acquisition this is not a crazy one...it is in their own backyard," he added.
Meanwhile on Tuesday Allan Gray also emerged as a new major shareholder in Nine Entertainment with a 7.9 per cent stake. Nine share price now reflects the difficult conditions for free to air networks, Mr Mawhinney said.
"And we would acknowledge that the future is likely to be difficult but we think a lot of it is now priced in." Nine shares closed at 87 cents on Tuesday and have been trading around $1 since August.
