-Potential private equity bid at 34% premium
-July 18 deadline to make formal bid or walk away
-High barriers to entry and recurring revenues make Euromoney an appealing bid target
Shares in global information provider Euromoney Institutional Investor (ERM), jumped 25% to £13.83 following confirmation that the group has received an approach from private equity firms Astorg Asset Management and Epiris LLP, regarding a possible cash offer of £14.61.
This equates to a 34% premium to Friday’s closing price. The Euromoney board are currently engaged in discussions with Astorg Asset Management and Epiris LLP, who have until July 18 to either make an offer or walk away.
Formed in 1998, Luxemburg based Astorg Asset Management manages €17 billion in assets. It focuses on investments in business to business companies with market leading positions that sell highly differentiated products or services.
Epiris LLP is a London based private equity firm which invests in opportunities to transform businesses. Since 2011, the group has invested £1.6 billion in 25 companies and generated an internal rate of return of over 35%.
AN ATTRACTIVE BID TARGET
Euromoney appears to be an attractive bid target given the amount of prior interest. Monday's announcement follows earlier all cash offer approaches from Astorg and Epiris LLP at £11.75, £12.50, £13.10 and £13.50.
Euromoney shares have been trading significantly below these levels recently.
This is despite strong first-half results (19 May) which were ahead of expectations from both a revenue and earnings perspective.
Pre-tax profit was 16% higher at £38.6 million and adjusted diluted earnings per share rose 8% to 26.6p. The total dividend increased by 7% to 6.1p per share.
Critically full-year trading is expected to be ahead of consensus expectations.
The core focus of Euromoney’s strategy has been to grow the data orientated segments of the business that benefits from high barriers to entry and recurring revenues.
PUTTING THE PIECES TOGETHER
This has in part been facilitated by three key bolt-on acquisitions. BoardEx, Wealth-X, and Wealth Engine.
Critically these deals have enabled Euromoney to build a leading people data intelligence business.
The $95 million invested in acquiring these three businesses is now clearly delivering significant returns for the group.
People intelligence provides data intelligence on relationships, individuals and organisations that can be used for building and developing connections.
There are two particularly appealing facets to this business.
Firstly, the depth, accuracy, and legal useability make data proprietary and serve as a barrier to entry; secondly, the business segment is characterized by 97% subscriptions with high renewal rates.
The outcome, it seems, is that the data provided is becoming increasingly fundamental to customers’ work.
