Tube ad firm Exterion goes on the market with $1bn price tag

Exterion, the billboard ad giant with the contract for London Underground, UK buses and railway stations, has been put up for sale by its US private-equity owners Platinum Equity for up to $1 billion (£800 million).

Sale memorandums started landing on potential buyers’ desks in the past few days as Platinum looks to tempt bidders into the growing advertising medium known as “out-of-home”.

The sale comes soon after private-equity giant KKR took part in a refinancing of the business that was originally the European arm of US group CBS Outdoor.

It also comes less than a year after Exterion won the lucrative contract to run London Underground’s billboards.

Potential buyers are understood to include major private-equity firms including Blackstone and TPG.

Few industry players will be able to bid for monopoly reasons, although sources cited Germany’s Ströer International as a potential trade bidder.

Technological advances mean billboards are becoming vast outdoor screens more akin to video displays than posters.

That opens it up to digital advertising and the potential to screen specific ads at particular sites and times to suit passers-by.

When it was part of CBS, the division got into major difficulties with its previous contract with London Underground.

CBS had pledged to invest heavily in upgrading the transport network’s ad sites, but the contract proved hugely costly when the advertising market collapsed in 2008.

A legal battle ensued in which CBS threatened to pull out early. CBS decided to sell the European arm to its present owners Platinum Equity in 2013.

The Underground contract went to JCDecaux, but Exterion won it back last year in a hard-fought battle.

The eight-year deal, worth an estimated £150 million a year, is the most valuable out-of-home ad contract in Europe and includes 400 stations on London Overground, Tramlink, Docklands Light Railway, Victoria Coach Station and, once it is operational, the Elizabeth line.

Exterion also has the contract for outdoor advertising at Westfield shopping centres.

One source said of Exterion’s business: “They’re mostly decent contracts, locked down for many years.”

However, he was sceptical Platinum would get the mooted $1 billion: Exterion made an operating profit of £6.3 million on £113.9 million turnover in 2015.

The sale is being handled by Goldman Sachs and Peter J Solomon which, like Exterion, declined to comment.

Exterion has not been without controversy. Mayor Sadiq Khan came under pressure today to ban a Tube poster for Protein World featuring Khloé Kardashian in the latest row about about “body-shaming” ads.