FTSE 100-listed Informa PLC (LON:INF) today launched an agreed takeover of its mid-cap peer UBM PLC (LON:UBM) to create a leading B2B information services group valued at around £10bn, almost a decade after UBM itself made a failed attempt to takeover Informa.
The proposed combination will see Informa offer UBM shareholders 163p in cash and 1.083 Informa shares for each UBM share they hold, valuing UBM at around 972.5p per share based on last night's Informa closing price of 747.5p. The proposed offer will also include a mix and match facility.
READ: UBM biggest FTSE 250 gainer as events organiser reports solid set of full-year results
In early morning trading, UBM shares jumped 13.7% higher to 894.5p, while Informa shares shed 8% at 686p.
The groups said it is expected that the combined entity will be owned around 65.5% by Informa shareholders and circa 34.5% by UBM shareholders.
After announcing following the market close on Tuesday that discussions regarding a potential combination were taking place, the two firms confirmed the plans in separate statements this morning.
They said that Derek Mapp, Informa’s chairman, and the blue chip firm’s chief executive, Stephen A. Carter would take up the same roles in the combined group.
The groups added that it is also envisaged that the board of the combined group would be comprised of seven non-executive directors from Informa and three from UBM.
They said the proposed combination is expected to result in significant synergies for the merged entity.
“Compelling commercial and strategic rationale”
In its statement, Informa said its board “sees compelling commercial and strategic rationale for the Proposed Combination, bringing benefits to Customers and Colleagues, while creating significant value for Shareholders, supported by accelerated growth opportunities and significant synergies.”
Stephen A. Carter, commented: “It is clear that the B2B Market is moving to Operating Scale and Industry Specialisation. The Combined Group will have the reach and market capabilities to take full advantage of these trends."
Informa also included a brief trading update with its statement, saying that “in respect of the 2017 financial year it expects the Group will deliver more than 3% underlying revenue growth.“
In a note to clients following the initial discussions statement, analysts at Citigroup said: “We Think an Increased Focus on Events Is Sensible — Increasing Informa's exposure to our preferred area of large-scale Events should be taken well.
“That said, we wonder whether this shift away from a more diversified portfolio is a signal from Informa management that they too have concerns over the potential longer term growth rates of some of the non-Event driven divisions.”
-- Updates share prices, adds broker comment --