JCDecaux, the French advertising group, is in talks to acquire News Outdoor Group, the $1 billion (£571 million) News Corporation-owned outdoor advertising business which revealed this week that its Moscow headquarters had been raided by Russian authorities.

JCDecaux said that it had entered exclusive discussions with News Corp, the parent company of The Times and majority owner of News Outdoor Group. The deal would make JCDecaux the biggest outdoor advertising company, overtaking Clear Channel Outdoor.

The French advertising group said in a statement to the market: “The proposed transaction would involve cash and shares and would result in a combination of certain of the assets of JCDecaux and News Outdoor Group. Discussions are at an early stage.”

News Outdoor’s growth strategy has involved building an outdoor advertising business that specialises in emerging advertising markets.

Founded in 1999, the division has operations in Russia, Bulgaria, the Czech Republic, Israel, Poland, Romania and Ukraine. It also has businesses in Malaysia, Indonesia, Thailand and Vietnam. In Russia alone, News Outdoor operates 40,000 advertising hoardings, accounting for 20 per cent of the outdoor market. In total, it employs more than 4,500 people.

Investigators raided the Moscow headquarters of News Outdoor’s Russian operation on Tuesday. The investigation was carried out by the prosecutor-general’s office and followed the issuing of a court order looking into negligence charges against a top official at the Moscow city government’s advertising committee.

The raid was linked to an inquiry by Russian authorities into whether the company received illegal discounts on billboard advertising in Moscow from 2002 to 2007. It is understood that the company faces no charges.

News Outdoor said the raid was unacceptable. Although recognising the necessity of an investigation, the company said that there was no reason to resort to such heavy-handed measures, particularly since it had said that it would be willing to cooperate with the inquiry.

The outdoor advertising business said that the methods adopted could affect its reputation and cast doubt on its financial health.

News Corp has focused on emerging markets to continue to grow as Western advertising markets have slowed and traditional methods of advertising have come under increasing pressure from the internet.

According to a report from UBS, developing markets account for 22 per cent of total global advertising.

The report said that emerging markets were expected to generate most of the growth in newspaper advertising and 50 per cent of the growth in television advertising in 2008.

Inside JCDecaux

1964 The year Jean-Claude Decaux formed the company after winning a bus shelter contract in Lyon

175m The number of people who see the company’s advertising sites every day

386,000 The number of advertising panels the group has in airports, subways, buses, tramways and trains

952,000 The number of advertising panels in 54 countries

Source: JCDecaux

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