Informa eyes German rival
INFORMA, the trade magazine publisher and events organiser, yesterday confirmed it was eyeing a takeover bid for German rival Springer Science and Business Media.
Shares in Informa, which publishes the world’s oldest newspaper Lloyd’s List, tumbled on the news that it was interested in acquiring debt-laden Springer, owned by private equity firms Candover and Cinven.
The private equity owners have been looking for a buyer for Springer at a possible price tag of about £500m, down from an initial asking price of £1bn.
Informa said: “Combining Springer and Informa would bring together two highly-respected and profitable academic publishers that would be positioned to take advantage of the opportunities in their core fields of Scientific, Technical and Medical, and Humanities and Social Sciences, respectively.
“The combination would be expected to generate significant synergy benefits from rationalisation of the combined cost base plus improved marketing and operating efficiencies.”
Investors balked at the logic of a combined company and worried Informa would overstretch itself to complete the merger. Shares in Informa dived nearly nine per cent yesterday to close at 285p.
Informa, which raised £242m in fresh capital in May, is likely to tap investors for another £1bn-£1.5bn to finance any deal.
Informa’s move on Springer is a role reversal, as Informa in 2006 rejected a £2.7bn takeover bid by Springer.
The aim was to make the biggest publishing house in Europe worth an estimated £4bn.
That bid fell through but sparked a rash of merger activity in the sector since, including the takeover of VNU, owner of ACNielsen.
SHOULD INFORMA TABLE A BID FOR SPRINGER?
GARETH DAVIES INVESTEC
“A deal would make strategic sense by combining two strong academic publishing businesses. At a potentially attractive price, we think this is a deal Informa management have to consider.”
ALEX DEGROOTE PANMURE GORDON
“The market’s first reaction is trepidation. Any such offer would be accompanied with another equity fund raising, soon after the rights issue. There are obvious synergy opportunities here.”
MANOJ LADWA ETX CAPITAL
“Informa’s bid for Springer Science may well provide long-term growth and value to shareholders, but in the near-term the market is not convinced. Springer’s debts match Informa’s value.”