Informa confirms talks with UBM

Publishing group Informa has confirmed that it has received an approach from United Business Media regarding a potential merger.

Morningstar.co.uk Editors 9 June, 2008 | 10:13AM
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The board said that it was considering the proposal. Informa is currently valued at around £1.64bn, which makes it the larger group. But it has high debt levels and it appears that UBM will be the senior partner in the deal. UBM is currently valued at around £1.47bn.

Analysts believe the two make a neat strategic fit. Both are focused on business to business publishing, but in different parts of the market. Informa, for example, has the Lloyds list, while UBM lists PR newswire among its brands. Informa generates more of its revenues from conferences and subscriptions, while UBM is more vulnerable to advertising revenues, which have been declining as the economic environment worsens.

UBM would be getting a bargain. Even though Informa shares had risen 54p to 440.25p, they are still well below their highs of over 600p early last year and the 630p offered by Springer Science and Business Media at the start of 2007. The p/e is just 9.52x.

There remains the possibility of a rival bid. In particular, private equity groups have shown an interest in business to business publishers. Apax bought Incisive Media and then teamed up with the Guardian Media Group to buy the business to business division of Emap.

UBM shares also rose on the prospect of a deal. They were up 21.5p to 627p. These trade on 10.4x earnings after what has been a difficult time for publishing groups. UBM has previously confined its M&A ambitions to relatively small deals, so this represents a break with tradition.

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