Informa says that it sees compelling commercial and strategic rationale for the move, bringing benefits to customers and colleagues, while creating significant value for shareholders, supported by accelerated growth opportunities and significant synergies.
Commenting on the announcement, Chief Executive of Informa, Stephen A. Carter, said: “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.”
He added: “We are today proposing the creation of a B2B Information Services Group, which will be ideally positioned to serve a market demanding ever greater Operating Scale and Industry Specialisation. The Combined Group will have the international reach, operational capabilities and cashflow to pursue the full growth opportunities this creates.”
It is expected, continues the statement, that the acquisition would be implemented through a share and cash offer by Informa for the entire share capital of UBM.
It is expected that the Combined Group will be owned c.65.5% by Informa shareholders and c.34.5% by UBM shareholders. The proposed offer will also include a mix and match facility, says Informa.
The logic behind the acquisition is set out as follows by Informa:
Compelling Strategic and Commercial Rationale
The Combined Group will be well-placed to benefit from the trend in the global B2B Information Services market towards increased Operating Scale and Industry Specialisation. The Combined Group will build on the respective strengths of Informa and UBM to meet growing customer demands for Brands and partners with international reach, specialist industry knowledge and an increasingly wide range of B2B services incorporating face-to-face platforms and events, data analytics, targeted marketing services and trusted, reliable intelligence and research.
The industrial logic of a combination of Informa and UBM is well understood. Given current portfolio complementarity, geographic focus and forward growth trajectory, now is the opportune moment to create a Combined Group with the scale and specialist capabilities able to capture the long-term growth potential of this market.
The timing is further supported by the positive benefits of the respective transformation programmes of both Groups, which have led to greater focus and operational efficiency.
The Proposed Combination
The Combined Group will be well-placed to build on the success of Informa’s 2014-2017 Growth Acceleration Plan and UBM’s Events First strategy. It will become the number one B2B Events Group globally and leading Exhibitions business in the key growth markets of China and the US, creating the scale and reach both Informa and UBM have been pursuing. The Combined Group will also own complementary subscription-based B2B Intelligence and specialist B2B Marketing Services businesses. It will also continue to own and operate a leading Scholarly Research business, Taylor & Francis, a core business that is expected to provide revenue growth, attractive margins and strong cashflow to the Combined Group.
Benefits of Operating Scale
* Revenue growth…creates scale growth business within attractive growth markets; near-term incremental revenue opportunities through cross-marketing, internationalisation, digital platforms, sponsorship and supplier commissions and longer-term potential growth acceleration through increased Industry Specialisation;
* Global reach…highly complementary geographic fit provides broader based growth and market opportunities with a significant proportion of revenue from faster growth economies, including leading positions in major markets of the United States, China, Middle East, South America and India;
* Quality of earnings…increased scale and international breadth provides resilience and balance, as well as greater predictability with a high proportion of revenue from forward booked and recurring revenue streams;
* Cashflow strength…both businesses benefit from attractive levels of profitability and cash conversion, leading to consistently strong Free Cash Flow. This provides flexibility and funds for maintaining balance sheet strength, continued investment in growth and progressive shareholder returns;
* B2B Events leadership…scale and leadership in the major Events markets of the United States, China, Middle East, South America and India, and strength in verticals including Health & Nutrition, Life Sciences & Pharma, Real Estate & Construction and Technology;
* Operational excellence…world class talent and extensive management experience focusing on best-in-class operational execution and performance across both the Informa and UBM portfolios;
* Technology innovation…increased operating and financial scale facilitating greater levels of product and platform innovation;
* Operating synergies…scale efficiencies and cost duplication, driving significant combined operating synergies.
Over time, the Proposed Combination will be the catalyst to capture the wider benefits of Specialisation in B2B Information Services, accelerating the shift to a more customer-led operating model built around the strengths of the Combined Group’s positions in key industry verticals and a broad set of powerful B2B capabilities.
Benefits of Industry Specialisation
* Industry strength and depth…international reach and depth in 15 targeted industry verticals, providing subscription-based products, high quality branded confexes, scale exhibitions and trade shows, specialist lead generation and content, all serving targeted networks and communities;
* Customer strength…deeper, more strategic customer relationships across multiple B2B channels and services;
* Marketing Services…growth opportunity in specialist B2B Marketing Services providing targeted lead generation at scale, including specialist B2B data and insight;
* Verticalisation…gradual shift to customer-led, vertically-oriented operating model, becoming a growth-enabler in key industries.