Outlook: When Decaux must explore the outer limits

PHEW! Saved by the bell, or rather that nice Mr Bridgeman at the Office of Fair Trading, who has chosen a very narrow definition of what constitutes a separate and competitive market to justify sending Decaux's pounds 475m bid for More Group off to the Monopolies and Mergers Commission. The upshot is that More Group will almost certainly fall to its preferred bidder of Clear Channel of the US, which now seems to have a clear run for its increased offer of 1110p a share.

This might seem like rough justice for the French pretender, since it was only four years ago that the OFT told Decaux that advertising on "free" street furniture, the sub, sub sector of the outdoor advertising market the authorities have chosen to refer on, was not a distinct market sector. Still, time moves on and this type of outdoor advertising has grown and developed quite a bit since then. Certainly there has been enough concern expressed to justify public scrutiny.

The question now is whether it is worth shareholders hanging on for the higher price that might be forthcoming from Decaux should it eventually be cleared by the MMC. Decaux was last night sounding out big institutional shareholders on whether it was worth attempting to stay in the game. The answer seems to be that Decaux would have to commit to a considerably higher price to make it worth their while.

The time value of the money over the four months of the MMC inquiry is alone worth about 30p a share. Given the very narrow terms of reference, there is also a high chance of the MMC finding against Decaux, at which point the Americans would have More Group over a barrel. Obviously there is a price Decaux could promise that would make it worth taking the risk, but is Decaux really prepared to pay it?