The entrance to Coterie.

S&P Global Ratings placed UBM PLC on credit watch positive on Friday following news of its potential acquisition by Informa PLC.

As reported, the boards of London-based companies Informa and UBM disclosed a proposal this week to combine the two groups to create a leading business-to-business information services group. The deal from Informa would send UBM 3.8 billion pounds, or $5.3 billion, in cash and stock, forming a world-leading exhibition and business events group worth 9 billion pounds.

The proposed combination is expected to be achieved through a share and cash offer by Informa for the entire share capital of UBM. Under the terms of the proposed combination, UBM shareholders would receive 1.083 Informa shares for each UBM share and 163 pence.

Sources said the talks began last year after Informa, which has a valuation of 6.1 billion pounds, approached smaller rival UBM about a possible deal. UBM has a market cap of 3.5 billion pounds.

A firm offer has not been made and the complete financial terms of the proposal aren’t certain.

Informa is a business intelligence, academic publishing and exhibitions group, while UBM organizes more than 300 market-leading business-to-business events every year, operating in more than 20 countries.

According to S&P Global Ratings, “The CreditWatch placement reflects our view that the potential combined group would have a bigger scale of operation, stronger geographical diversity, and larger show diversification as we understand there is no material overlap between the two entities’ show portfolios. However, uncertainties remain on the completion of the transaction, as well as on the pro forma debt financing of the combined group, and the integration of UBM into Informa’s global exhibition operations.”

S&P currently rates UBM’s debt at “BBB-minus” and is now considering whether to move that ranking higher.

“We assume an equity value of about 3.8 billion pounds for UBM. We view the combination of Informa and UBM, by way of Informa’s potential acquisition, as a material credit event for UBM,” said S&P Global.

“We intend to resolve the CreditWatch placement after we receive further clarity on whether Informa will make a firm acquisition proposal. In addition, we await further information including key financial details and offer terms, combined with greater certainty around progression and completion of any firm offer. We believe that, if the transaction did materialize and, subject to more clarity on the combined group’s financial structure, the combined entity’s creditworthiness is likely to be at least commensurate with the current ‘BBB-minus’ rating on UBM,” the note said.

The proposed combination is projected to lead to significant synergies for the combined group.

A research note issued by Deutsche Bank in the United Kingdom on Wednesday, said,  “The premium offered by INF to UBM shareholders was larger than we had initially expected, hence the returns and accretion from the proposed combination is lower than we previously calculated… Return on investment is 6.5 percent three years out by our estimate.

“We think there are compelling strategic reasons for the deal, relating to the creation of a scaled, number-one global exhibitions player, diversification and synergies,” said Deutsche Bank’s research note.

UBM, which is the number-two trade show organizer globally based on revenues, has focused in recent years on events, buying Advanstar Communications in 2014. If approved, the merger aims to provide Informa with greater scale and specialization in events, the fastest growing part of the business, Informa said.

Under Takeover Panel rules, Informa has until Feb. 13 to make an offer or walk away for at least six months.

Credit Suisse and JP Morgan Cazenove are working with UBM, while Centerview Partners, Bank of America, Merrill Lynch and Barclays are advising Informa.

UBM’s trade shows in the U.S. include Coterie, Project, MAGIC, WWD MAGIC, Fame, Moda, Pooltradeshow and AccessoriesTheShow.

Due to regulatory constraints, UBM said it was unable to comment at this time.