Buyout still an option for SMG's Primesight

LONDON - A management buyout is one of two options still on the table for Primesight, the SMG-owned outdoor advertising company.

A leveraged MBO is facing competition from one other bidder, widely thought to be a private equity company. The possibility of an MBO was revealed in Media Week (6 February, page 5).

Other outdoor advertisers, including JCDecaux and Titan Outdoor, are thought to have made preliminary offers, but none have taken the process any further.

SMG bosses are expected to make an announcement within a fortnight over the future of Primesight, which was put up for sale in September, together with cinema advertising business Pearl & Dean, because they were "no longer core to the group".

SMG was originally seeking £90m for both Primesight and Pearl & Dean, but analysts have valued Primesight at £55m and Pearl & Dean at less than £10m.

No buyers are thought to have come forward for Pearl & Dean, with Carlton Screen Advertising owner ITV having ruled itself out of the running early on.

Primesight is seen as a more popular option, owning the rights to a strong network of 13,500 six-sheet panels and 141 large format backlit panels, mainly in London.

Analysts have previously spoken about the pros and cons of a management buyout, which will involve the current management team remaining in place, with financial backing from a venture capitalist.

Keeping an existing management team allows for a better understanding of the company, its client relationships and the day-to-day running of the business.

The new board at SMG, which was put in place a month ago following the exit of chairman Chris Masters and the collapse of merger talks with TalkSport owner UTV, is expected to confirm that the businesses are still for sale when new chief executive Rob Woodward delivers the full-year preliminary results tomorrow (Thursday).

Woodward's announcement is also expected to focus on the need for improved programming across SMG-produced shows, which was reflected in the appointment of RDF Media Group's Alan Clement as content director for SMG Television.

Shares yesterday (Tuesday) were priced at 63p, valuing the company at more than £199m. At the same time, analysts were predicting a fall in pre-tax profits of more than £7m, to £11.4m.

SMG declined to comment on plans for Primesight's future.

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