Informa eyes up £3.4bn deal

Posted by admin on 1 July, 2008 under Business news | Be the First to Comment

Informa has received a tentative 506p-per-share approach from a private equity consortium which would value the trade fairs and scientific journals business at £3.4bn including debt, the company said on Tuesday night.

If successfully completed, the approach from Providence Equity Partners, Carlyle Group and Hellman & Friedman would rank as the world’s largest private equity bid since leveraged finance markets seized up late last summer.

The proposal would value Informa’s equity at £2.15bn, on top of which its net debt stood at £1.25bn at the end of 2007. The consortium has yet to begin formal due diligence.

Investor doubts about the consortium’s ability to finance a deal of this scale have weighed on Informa’s share price, which has fallen from 435p on June 19 when the consortium confirmed it had made an approach. On Tuesday, shares in Informa closed down 8.4 per cent at 378¼p. The company issued its statement after the market closed.

The consortium lined up financing last month from a group of banks including ING and Goldman Sachs, which have offered to provide £1.39bn of senior debt priced at 375 basis points over Libor, and an additional £463m in high-yield debt costing 11.75 per cent.

Providence and its partners made their approach shortly before the collapse of an earlier merger-of-equals proposal from United Business Media, a smaller rival to Informa. UBM has reserved the right to return should the private equity approach come to nothing.

The consortium’s continued interest underlines the private equity community’s appetite for business-to-business media assets, which offer a higher share of annually renewed subscription revenues than most consumer-facing media stocks.

Providence bid unsuccessfully for Emap’s business publishing assets, which were sold in December to Apax Partners. Apax and Candover are expected to show interest should the consortium sell off any of Informa’s assets.

News reported by Financial Times Ltd