Affichage on the JCDecaux leash
With JCDecaux's entry into Europlakat, Affichage's coziness is now over
With JCDecaux's entry into Europlakat, Affichage's coziness is now overJCDecaux and Affichage are still cautious about their future partnership at Europlakat (EPI). However, the written interview with Affichage CEO Christian Kauter and the verbal interview with Jean-François Decaux show that JCDecaux is more interested in pushing ahead: JCDecaux is more on the push, Affichage more on the defensive.Thanks to the joint venture with B&C Holding, JCDecaux is strengthening its presence in Austria and Eastern Europe. How does this expansion benefit you?
Jean-François Decaux: By taking control of Gewista, we are now operating in Austria for the first time, with a market share of 40 percent. Europlakat (EPI) brings us synergies in Eastern Europe.
JCDecaux was previously present in Poland, Hungary and above all in the Czech and Slovak Republics with street furniture (bus shelters, advertising pillars), whereas EPI is primarily strong with large surfaces. These activities are complementary. We also see EPI's entry as an important step towards consolidating the Eastern European poster market, which is still very fragmented.
Does JCDecaux want to contribute its wholly-owned Eastern European subsidiaries to EPI?
Decaux: That is our goal, but how we do it is still open.
If you add up the voting rights that JCDecaux has in EPI via Gewista and Affichage, you arrive at 53.5 percent. However, there is now a "parity cooperation agreement" between Gewista and Affichage. Will you still adhere to this in future?
Decaux: The voting rights are not cumulative. But the new situation naturally requires changes at EPI, which we want to discuss with Affichage in the near future. The contract will also be an issue. We clearly want to use EPI as a vehicle for our expansion in Eastern Europe. But we also want to
remain in the spirit of the 50-50 agreement.
EPI was one of the first outdoor advertisers to become active in Eastern European countries. Why was JCDecaux more cautious?
Decaux: Anyone who, like us, is primarily active in the street furniture sector has to make significantly higher investments than if you are setting up poster sites. We need political security and exclusive contracts. In Moscow, for example, the city authorities did not honor the exclusive contract with a German poster company. However, too much competition destroys the concept of uniform street furniture, which also includes an infrastructure for maintenance.
Until now, Affichage has denied you a say in Affichage's own Board of Directors despite your 30 percent stake. With EPI, however, Affichage will now have to cooperate with JCDecaux. How will that work?
Decaux: As I said, we still need to talk about that. But it's actually already working very well. Two weeks ago, we heard that the Polish media company Agora had tried to take over AMS, Poland's largest listed outdoor advertising company, in an unfriendly manner. I then called Christian Kauter and, with his approval, I immediately made AMS shareholders a friendly offer that would initially give JCDecaux, and later EPI, 20 percent of the AMS voting rights. So we have already taken action together at short notice. We won't know whether our action will be a complete success until the end of April, but we have already achieved a partial success because Agora withdrew its offer.
Now that you have joined EPI, will you also revisit the issue of having a say on the Affichage Board of Directors?
Decaux: We are still waiting for the decision of the Competition Commission. But of course we don't like the transfer restriction clause at Affichage at all. We can't have the same number of votes with our 30 percent stake as Clear Channel, for example, which has an 8 percent stake in Affichage. Especially not since Affichage and we are now strategic partners in Eastern Europe.
Couldn't your entry into EPI now have a negative impact on the share price?
May 7, the forthcoming decision by the ComCo?
Decaux: No, I don't think so, the Competition Commission is looking into the competitive situation in Switzerland. But there have never been any agreements between Affichage and JCDecaux, not even with regard to foreign business. Affichage also applied to buy the B&C stake in Gewista; even there we were competitors.
Does JCDecaux's investment in Europlakat (EPI) come as a surprise to you?
Christian Kauter: It has been known for some time that Bank Austria will sell its 51 percent stake in Gewista and that JCDecaux is interested in buying it. We also knew that Bank Austria preferred JCDecaux as a buyer to the Clear Channel Group, which also owns Plakanda.
What do you think of the new partner at EPI?
Kauter: As you know, JCDecaux is the largest provider of outdoor advertising in Europe and is now continuing its expansion strategy in Eastern Europe.
There is an "equal cooperation agreement on strategic issues" between Austrian Gewista and Affichage regarding EPI. Will this remain in place?
Kauter: Yes, that is contractually stipulated.
Then it is more than just a piece of paper in view of the fact that JCDecaux has achieved a cumulative voting majority of 53.5 percent via Gewista and Affichage.
Kauter: There is no reason for Affichage to doubt compliance with this agreement. Moreover, the two shareholdings are not cumulative. The shareholding ratio in EPI, a joint venture between Affichage and Gewista, is still 49 to 51 percent. The co-determination rights are defined in the cooperation agreement.
The situation at EPI must now be ambivalent for Affichage: In Switzerland, you have so far denied JCDecaux access to the Affichage Board of Directors; at EPI, you will now have to negotiate with him.
Kauter: We have always considered cooperation with JCDecaux abroad as a prospect. Opening up new markets is capital-intensive. A partnership-based solution is in our interest. The situation is different on the domestic market. Here, Affichage has proven that it understands the out-of-home business, sets international benchmarks and does not need a partner to survive.
A look into the future: How will EPI change with JCDecaux?
Kauter: I expect a standardization of poster formats in the EPI countries and a more pronounced focus on profitability.
A supplementary question in a different context: Will Eric Honegger remain on the Affichage Board of Directors? Has his position ever been under discussion in recent weeks? Or will this question be on the agenda at the upcoming Affichage AGM?
Kauter: Eric Honegger enjoys the full confidence of the Board of Directors. He is a member of the Board of Directors elected by the AGM of Affichage Holding until 2003.
Interviews: Markus Knöpfli
JCDecaux controls Europlakat
Jean-François Decaux: By taking control of Gewista, we are now operating in Austria for the first time, with a market share of 40 percent. Europlakat (EPI) brings us synergies in Eastern Europe.
JCDecaux was previously present in Poland, Hungary and above all in the Czech and Slovak Republics with street furniture (bus shelters, advertising pillars), whereas EPI is primarily strong with large surfaces. These activities are complementary. We also see EPI's entry as an important step towards consolidating the Eastern European poster market, which is still very fragmented.
Does JCDecaux want to contribute its wholly-owned Eastern European subsidiaries to EPI?
Decaux: That is our goal, but how we do it is still open.
If you add up the voting rights that JCDecaux has in EPI via Gewista and Affichage, you arrive at 53.5 percent. However, there is now a "parity cooperation agreement" between Gewista and Affichage. Will you still adhere to this in future?
Decaux: The voting rights are not cumulative. But the new situation naturally requires changes at EPI, which we want to discuss with Affichage in the near future. The contract will also be an issue. We clearly want to use EPI as a vehicle for our expansion in Eastern Europe. But we also want to
remain in the spirit of the 50-50 agreement.
EPI was one of the first outdoor advertisers to become active in Eastern European countries. Why was JCDecaux more cautious?
Decaux: Anyone who, like us, is primarily active in the street furniture sector has to make significantly higher investments than if you are setting up poster sites. We need political security and exclusive contracts. In Moscow, for example, the city authorities did not honor the exclusive contract with a German poster company. However, too much competition destroys the concept of uniform street furniture, which also includes an infrastructure for maintenance.
Until now, Affichage has denied you a say in Affichage's own Board of Directors despite your 30 percent stake. With EPI, however, Affichage will now have to cooperate with JCDecaux. How will that work?
Decaux: As I said, we still need to talk about that. But it's actually already working very well. Two weeks ago, we heard that the Polish media company Agora had tried to take over AMS, Poland's largest listed outdoor advertising company, in an unfriendly manner. I then called Christian Kauter and, with his approval, I immediately made AMS shareholders a friendly offer that would initially give JCDecaux, and later EPI, 20 percent of the AMS voting rights. So we have already taken action together at short notice. We won't know whether our action will be a complete success until the end of April, but we have already achieved a partial success because Agora withdrew its offer.
Now that you have joined EPI, will you also revisit the issue of having a say on the Affichage Board of Directors?
Decaux: We are still waiting for the decision of the Competition Commission. But of course we don't like the transfer restriction clause at Affichage at all. We can't have the same number of votes with our 30 percent stake as Clear Channel, for example, which has an 8 percent stake in Affichage. Especially not since Affichage and we are now strategic partners in Eastern Europe.
Couldn't your entry into EPI now have a negative impact on the share price?
May 7, the forthcoming decision by the ComCo?
Decaux: No, I don't think so, the Competition Commission is looking into the competitive situation in Switzerland. But there have never been any agreements between Affichage and JCDecaux, not even with regard to foreign business. Affichage also applied to buy the B&C stake in Gewista; even there we were competitors.
Does JCDecaux's investment in Europlakat (EPI) come as a surprise to you?
Christian Kauter: It has been known for some time that Bank Austria will sell its 51 percent stake in Gewista and that JCDecaux is interested in buying it. We also knew that Bank Austria preferred JCDecaux as a buyer to the Clear Channel Group, which also owns Plakanda.
What do you think of the new partner at EPI?
Kauter: As you know, JCDecaux is the largest provider of outdoor advertising in Europe and is now continuing its expansion strategy in Eastern Europe.
There is an "equal cooperation agreement on strategic issues" between Austrian Gewista and Affichage regarding EPI. Will this remain in place?
Kauter: Yes, that is contractually stipulated.
Then it is more than just a piece of paper in view of the fact that JCDecaux has achieved a cumulative voting majority of 53.5 percent via Gewista and Affichage.
Kauter: There is no reason for Affichage to doubt compliance with this agreement. Moreover, the two shareholdings are not cumulative. The shareholding ratio in EPI, a joint venture between Affichage and Gewista, is still 49 to 51 percent. The co-determination rights are defined in the cooperation agreement.
The situation at EPI must now be ambivalent for Affichage: In Switzerland, you have so far denied JCDecaux access to the Affichage Board of Directors; at EPI, you will now have to negotiate with him.
Kauter: We have always considered cooperation with JCDecaux abroad as a prospect. Opening up new markets is capital-intensive. A partnership-based solution is in our interest. The situation is different on the domestic market. Here, Affichage has proven that it understands the out-of-home business, sets international benchmarks and does not need a partner to survive.
A look into the future: How will EPI change with JCDecaux?
Kauter: I expect a standardization of poster formats in the EPI countries and a more pronounced focus on profitability.
A supplementary question in a different context: Will Eric Honegger remain on the Affichage Board of Directors? Has his position ever been under discussion in recent weeks? Or will this question be on the agenda at the upcoming Affichage AGM?
Kauter: Eric Honegger enjoys the full confidence of the Board of Directors. He is a member of the Board of Directors elected by the AGM of Affichage Holding until 2003.
Interviews: Markus Knöpfli
JCDecaux controls Europlakat
At the beginning of April, the French outdoor advertising company JCDecaux took control of the Austrian poster company Gewista and thus also of its Eastern European subsidiary Europlakat, in which Affichage Holding holds 49 percent (WW 15/01). B&C-Holding, which as a financial investor manages the shares of Gewista's previous majority shareholder Bank Austria, and JCDecaux establish a joint venture called JCDecaux Central Eastern Europe Holding (DCEE), in which JCDecaux will hold 58.5 percent. B&C will contribute the Bank Austria share in Gewista (51 percent) to DCEE, while JCDecaux will contribute its 16 percent share in Gewista and the 30 percent share in Affichage.
