APN Outdoor and oOh!Media have scrapped their proposed $1.6 billion merger after the competition watchdog flagged concerns the deal could increase prices and lower service in the outdoor advertising market.
The companies released identical statements to the Australian Securites Exchange in which they disagreed with the Australian Competition and Consumer Commission's view, but said the concessions necessary to address the issues would make the deal unviable.
The advertisers say they compete with rivals in various media, not just on billboards and other outdoor media.
"We're amazed that in this day and age, the media market could be divided into narrow segments, and we cannot fathom how anyone could suggest a merger such as this could restrict innovation - innovation is core to our business and always will be," oO!Media managing director Brendon Cook said in a statement.
"So we don't agree with the ACCC position, but don't want to spend six to 12 months educating the ACCC or in court, especially as the media market is changing so quickly."
Mr Cook said oOh!Media would continue to look for opportunities, but did not say whether those included mergers or acquisitions.
Neither party will pay the other a break fee in relation to the termination of the merger agreement, oOh!Media said.
oOh!Media issued full-year guidance of underlying earnings before interest, tax, depreciation and amortisation of between $88 million and $92 million.
It also confirmed plans to spend between $35 million and $40 million converting signs to digital and developing business and data systems.
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