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Wednesday, October 15, 2008

News and JC Decaux pull the pin on talks

TALKS between JC Decaux and Rupert Murdoch's News Corporation over a $US1 billion ($1.44 million) deal to create the world's biggest outdoor advertising company have collapsed, with both sides blaming the crisis in financial markets.

The potential deal, which came to light last month, involved JC Decaux merging with News Corp's News Outdoor Group (NOG) and leapfrogging a rival, Clear Channel Communications, to become the world's largest outdoor advertising specialist.

Talks were aimed at a deal with a mix of cash and shares that would result in "a combination" of JC Decaux and NOG.

"JC Decaux and News Corporation have ended discussions regarding a potential transaction," the companies said in a joint statement. "Both companies recognise that economic and capital market conditions have made it increasingly difficult to conclude strategic partnerships on this scale."

Mr Murdoch is thought to have grown uneasy about the NOG business, which employs 4500 people across eastern Europe, Russia and Asia.

Last year News Corp admitted it was looking at a sale of NOG and, in August, Mr Murdoch said that, despite the growth of the operation, he was becoming increasingly wary of doing business in Russia.

NOG's Moscow headquarters was raided last month by investigators from the Prosecutor-General's office as part of a criminal investigation into the first deputy chairman of the Moscow Committee for Advertising, Information and Decoration.

In June, News Outdoor Russia was accused of receiving illegal discounts on billboard advertising in Moscow from the committee between 2002 and last year but the claim was thrown out of court.

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