CBS Outdoor Americas Inc said Monday it would buy the billboard business from Van Wagner Communications, a privately held company with outdoor advertising in New York's Times Square and on buses on the Las Vegas strip, for $690 million in cash.
The deal includes about 1,100 large-format billboards in 11 U.S. markets, which had total revenue of $206 million in 2013, CBS Outdoor said on Monday.
"It gives a tremendous boost to our assets," CBS Outdoor Chief Executive Officer Jeremy Male said in an interview, adding that the billboards are in "really iconic locations that we think will be significantly additive to our portfolio in the U.S."
Male said there would be "great upside" in converting some of Van Wagner billboards to digital billboard technology. About 1.5 percent of CBS' billboard are digital, about the same percentage as Van Wagner's, and make up about 10 percent of CBS' billboard revenue.
Reuters reported exclusively last week that Van Wagner was exploring a sale that could fetch more than $600 million, and that CBS Outdoor was one of the companies interested in buying the assets.
The deal is subject to regulatory review and expected to close early next year. It will be immediately add to adjusted funds from operations per share in the mid-single-digit range in percentage terms, Male added.
CBS Outdoor, whose customers include Apple Inc AAPL.O, McDonald's Corp MCD.N and Sony Corp 6758.T SNE.N, went public in late March after it was spun off from CBS CBS.N.
The company has about 329,100 displays in the United States and about 26,100 displays across Canada and Latin America.
CBS Outdoor plans to hire some Van Wagner employees. Van Wagner will keep its blimp business and sports consulting arm, which works with more than 200 professional and U.S. college teams.
Centerview Partners, Goldman Sachs GS.N and Peter J. Solomon advised CBS Outdoor, while Jones Day was the legal adviser. Van Wagner was advised by Evercore Partners and Onera Media, while Fried Frank Harris Shriver & Jacobson was the legal adviser.
(Reporting by Liana B. Baker in New York and Abhirup Roy in Bangalore; Editing by Maju Samuel and Jeffrey Benkoe)