Buyout firm GMT Communications has bought outdoor advertising business Primesight from indebted media group SMG for £62 million ($125 million, €91 million).
The firm has paid £52 million up front and reserved £10 million in loans half of which will be paid upon exit or within five years, while the remaining £5 million will be paid dependent on performance.
The deal is dependent on shareholder approval having been sanctioned by the company’s board.
The deal is a premium to what the company was expecting from the sale process three months ago in talks with undisclosed bidders.
A city source said: “The main interest in this sale was from private equity as competition issues and regulatory clearance had dissuaded trade buyers.” The offer is above the £55 million price tag expected by the city after the bid earlier this year, he said.
The board is attempting to reduce the company’s debt to a manageable level from its current £170-180 million level. This is close to the market capitalisation of the company.
Rob Woodward, chief executive of SMG said in a statement: “The proceeds of the sale will strengthen SMG’s balance sheet while freeing the management team to concentrate on the turnaround of the television business and the disposal of our other non core businesses.”
The company is currently disposing of all assets except the television business. It intends to float Virgin Radio this Autumn. It is also trying to sell cinema advertising business Pearl and Dean, which the source said was “worth nothing on the company’s books.”