Informa to pay 'very full' price for UBM to expand trade show empire

Black Hat
UBM holds events such as the Black Hat conference, an information security event

Informa investors balked at the price the company plans to pay for rival trade show organiser UBM amid skepticism over the cost savings and cross-selling benefits the long-rumoured merger will bring.

The terms of the proposed takeover, announced today, value UBM at £4.5bn including debt, a level criticised by City analysts as “very full”.

Informa chief executive Stephen Carter’s case was not helped by the company’s inability to present cost savings and revenue growth targets. The numbers had not yet been audited, he said, after news of merger talks leaked on Monday.

He was left claiming there would be “significant” synergies to justify the price. Investors were unconvinced and marked Informa down more than 8pc, although the shares recovered slightly to end the day down 5.7pc.

Lord Carter, a former Gordon Brown adviser, is bidding to create the world’s largest business events operator a decade after UBM and Informa last tried to combine. He said the pair make a good match territorially and in the industries they target, and said he did not expect opposition from competition authorities.

Following the takeover, paid for with 17pc cash and 83pc shares, Informa shareholders would own nearly two thirds of the company and UBM shareholders the rest.

Observers warned that as in 2008 private equity firms could attempt to gatecrash the talks.

Angus Grierson of  LGB Corporate Finance said: “Renewed interest by Informa and UBM in a potential merger could certainly spark interest from private equity houses given the historical interest shown by such investors in the businesses.

“A decade ago when the merger was first mooted, Candover, Cinven and Providence Equity Partners were all rumoured to be considering bids and they could well renew their interest.”

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