- Deal priced at a 53% premium
- News caps stunning Ascential returns this year
- Strong strategic logic behind takeover
After a remarkable start to the year in terms of shareholder returns, investors in events and analysis firm Ascential (ASCL) woke to the news today that the board had agreed a £1.2 billion conditional bid for the company from rival Informa (INF).
Ascential shares jumped 116p or 26% to 563p, just shy of the 568p per share cash offer and an all-time high on an adjusted basis after factoring in May’s share consolidation.
SHAREHOLDER REWARDS
The offer represents a 53% premium to last night’s closing price of 371p and a 61% premium to Ascential’s 30-day weighted average share price of 352p.
On top of this, Ascential has agreed that if the sale of US media management firm Hudson MX – in which it has a 36.5% stake – completes before the Informa takeover, shareholders will be entitled to the net proceeds in the form of a cash dividend with no reduction in the value of their shares under the offer.
The Informa deal represents more stellar returns for investors who kept the faith in the events business after the ups and downs of the pandemic and several lockdowns.
Earlier this year, the firm announced it would return £850 million to shareholders through a tender offer of up to £300 million, a special dividend of up to £450 million and an on-market share buyback of £100 million.
STRATEGIC LOGIC
There are obvious synergies between the two businesses, and Informa argues it is ‘uniquely positioned to provide the global platform and operations to enable Ascential's divisions to continue their strong growth trajectory’ through the ‘substantial support, investment and expansion that comes with being part of a broader operating group’.
Informa also says it expects ‘significant’ revenue opportunities to arise through combining the two firms, including cross-selling and expanding into fast-growing economies where Informa has an established position.
The firm is aiming to generate around £12 million of annual cost savings and efficiency improvements by combining Ascential into Informa's operating platform.
Combined with tax benefits which can be realised-post combination, the Offer implies a low double-digit multiple of enterprise value to Ascential's estimated EBITDA (earnings before interest, tax, depreciation and amortisation) in 2025.
