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-class exhibition and business events group worth nine billion pounds.
The deal rekindles plans from 2008 whereby UBM tried to buy Informa, to create a major business media and conventions group.
The proposed combination is expected to be implemented 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.
The proposed combination seeks to result in 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 1 global exhibitions player, diversification and synergies. In our view, INF’s share price fall today creates a compelling buying opportunity,” said Deutsche Bank’s research note.
UBM has focused in recent years on events, buying Advanstar Communications in 2014. If approved, the deal 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 organizes more than 300 market-leading B2B events every year, operating in more than 20 countries.
UBM’s trade shows in the U.S. include Coterie, Project, MAGIC, WWD MAGIC, Fame, Moda, Pooltradeshow and AccessoriesTheShow. Several of these trade shows have been rejiggered in recent months, with internal restructuring changes. It couldn’t be learned what impact a merger would have on these trade shows, and whether there would be job cuts.
Due to regulatory constraints UBM said it was unable to comment at this time.
Tom Nastos, president of women’s, men’s and accessories at UBM Fashion in the U.S., had no comment about the proposed deal. He was previously chief executive officer and president of ENK, which UBM acquired in 2012.
Should the deal be consummated, Informa’s ceo Stephen A. Carter would become ceo of the new group. Derek Mapp, chairman of Informa, would be chairman of the combined group, which would be headquartered in London.