Less than a week after the completion of an exchange offer that fully separated it from former parent CBS (CBS), and its subsequent conversion to REIT status, CBS Outdoor (CBSO) has announced a major acquisition which will grow the company’s footprint significantly. The company will be purchasing approximately 1100 billboards from Van Wagner Communications, LLC for $690 million in cash. The billboards, which are located in 11 major markets, earned $64 million in “Pro Forma Adjusted OIBDA” in 2013, on $206 million in revenue. CBSO earned $393 million on the same basis on $1.294 billion in revenue.The announcement is not all that surprising, as most people, including this site, predicted that the company would try to grow via acquisition since organic growth is expected to be tough in the billboard space.
CBSO will fund the purchase with cash on hand and through the issuance of additional long term debt. CBSO says that the transaction will add to REIT eligible assets, and be accretive immediately.
Disclosure: The author holds no position in any stock mentioned