Digital billboard maker XTD has cancelled its acquisition of mobile ad start-up Contact Light amid consolidation in the so-called “out-of-home” advertising sector.

The stock fell 13 per cent to 2.6c in early Monday trade.

XTD announced in March it would buy the remaining 63 per cent of Contact Light that it did not already own.

Contact Light makes technology that sends messages from digital billboards to nearby mobile phones.

XTD installs high-tech digital billboards in train stations and operates an app called EMBARK which helps commuters plan journeys while interacting with marketing content.

The all-scrip deal was priced at 4c per share and would have valued Contact Light at about $7 million. XTD was valued at $4 million based on its 3c Friday closing price.

A wave of merger and acqusition activity has washed through the out-of-home sector recently with the top four players consolidating into two via JCDecaux’s takeover of APN Outdoor and oOh!media’s acquisition of Adshel.

>> Read Stockhead’s quick guide to ASX-listed advertising stocks

“Since the company’s previous update the implications of the recent M&A [merger and acqusition] activity in Out-of-Home sector have become more apparent,” XTD told investors on Monday morning.

“In particular, they have directly impacted Contact Light’s negotiations to monetise its proprietary data products before the M&A wave, and these conversations are now being restructured to take advantage of the significant market consolidation.

“Therefore, the XTD Board has resolved to indefinitely delay the proposed purchase of CL.”

 

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