The shareholders of Klass Advertising, the outdoor advertising firm, are considering acquiring a small market player, after selling 51% of their company to US advertising giant, Clear Channel Outdoor, for over 5m euros.
"A period of integration with Clear Channel Outdoor will ensue, but we are also looking at smaller players on the market with a potential acquisition in mind," says Florin Gindila, general manager of Klass Advertising.
Klass Advertising, which keeps a low profile on the market is the first major outdoor advertising company to sign with a strategic investor this year.
Foreign companies are heightening their focus on the Romanian market after two major deals were sealed last year - Affichage-Churchill View and Multireklam-Effect Media.
"Clear Channel Outdoor had been attempting to enter the domestic market for a while and we were probably their last opportunity of making an acquisition in Romania," explains the general manager of Klass Advertising.
He adds that talks were held with five investors, including one domestic firm.
Talks with the Americans have being going on for a year, and the moment they decided to buy, talks picked up and the deal was signed three months later, that is two weeks ago.
"We were doing well financially and no doubts were raised," says Gindila. In 2005, Klass Advertising posted a turnover worth 2.8m euros, employed a staff of 18 and registered an income of 0.8m euros. "In 2006, we posted turnover worth 4.5m euros and income worth 1.5m euros," specified Gindila.
The company's four shareholders (Radu Parlog, Ileana Parlog, Florin Gindila and Mihai Gabriel) sold a cumulated 51% stake, but none of them exited the business completely.
"We all like outdoor (advertising i.e.) and want to remain involved. Also, we chose not to exit, because Clear Channel did not want complete involvement in the running of the business. Foreign investors are wary of the outdoor advertising market, which is weakly regulated at present," specifies Gindila.
"This is not a typical acquisition, but more of a partnership. Practically, we will have domestic management supported by the parent company, as it would have been difficult for foreign management to cope independently on the Romanian market," believes Gindila.
Klass Advertising was founded by Radu Parlog and first entered the market in 1992, at a time when the Romanian outdoor advertising market was just taking shape.
The company started its development programme around 2000-2001. "We focused on large-scale ads on the private market, excluding the public domain. Through our partnership with Clear Channel, we plan to start using public outdoor advertising space as well. The leaders of the Romanian outdoor advertising market are Euromedia, News and Affichage, with the market estimated to be worth more than 30m euros.
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