Agency: Adam & Eve
By Harriet Dennys, mediaweek.co.uk, Monday, 18 January 2010 05:43PM
JCDecaux would not disclose the full financial details of the takeover, but it is understood the deal has been structured as a pre-packaged sale out of administration, after Titan formally entered into administration earlier today (Monday).
The acquisition consolidates French-owned JCDecaux's lead in the UK out-of-home advertising industry, giving the company about 29% of the market.
Under the terms of the deal, JCDecaux will take over the majority of Titan Outdoor's UK advertising inventory, broadening its transport media portfolio with the addition of rail sites and strengthening its retail and mall offering.
Speaking exclusively to Media Week, Jeremy Male, chief executive of JCDecaux UK and Northern Europe, said: "Titan has a leading position in rail and shopping malls, so it is a great fit for our business and will undoubtedly strengthen our offering to advertisers."
All Titan staff associated with the business bought by JCDecaux will move across to the new owner under TUPE legislation, and all employees will eventually be based at JCDecaux's headquarters near Paddington.
It is not yet clear how management teams will be affected, but JCDecaux anticipates some restructuring as it integrates the former Titan assets with its business.
Speculation has been mounting over the future of Titan Outdoor Advertising, the UK subsidiary of Titan Worldwide, following the sale of its billboards to Primesight in August and the closure of its business in the Republic of Ireland in November.
Titan's UK management team has been considering a number of strategic options for selling the business since last autumn, after it emerged that parent company TO Holdings was struggling to repay its significant global bank debt.
Options included a management buyout led by UK chief executive Jon Slatkin, financial backing from private equity firms or takeover talks with trade competitors.
JCDecaux's takeover offer gave the banks the highest recovery of the money owed, and Titan today concluded the deal to sell its UK operation. It is thought Titan Outdoor made sales worth about £40m in 2009, excluding revenue from its roadside business, sold to Primesight in August last year.
A senior industry source attributed Titan's demise to the legacy left by Maiden, the outdoor firm bought by Titan in 2006, which overpaid for some of its major contracts.
The source said: "Titan tried to repair the damage, but the legacy of the difficult contracts and the downturn in the economy meant it wasn't working and was losing money."
Slatkin said: "We believe we have built a solid business that will be around in the future, and the way to ensure its success is to have a solid backer like JCDecaux."
The 100 staff at Titan's London office and JCDecaux's 600 UK staff were informed of the takeover at 5pm today, and an announcement is due to be made to the City at 6pm. Advertising deals that have already been booked through Titan will be honoured.
JCDecaux first stepped up its presence in the UK outdoor market in 1999, when it bought Havas Media's out-of-home business, including billboard firm Mills & Allen and airport advertiser Sky Sites, from the Vivendi Group for $976m (£599m).
The company has since grown to become the market leader in the UK, accounting for about 25% of the market and posting global revenue of €1,356.1m (£1,195.2m) for the first nine months of 2009.
On publication of the company's financial results for the first half of 2009, which showed global operating profits fell 40.0% to €166.4m (£146.710m), chairman Jean-Francois Decaux expressed interest in acquiring the US out-of-home division of either Clear Channel or CBS Outdoor, its largest rivals in the States.
This article was first published on mediaweek.co.uk
Agency: Adam & Eve