Informa Plc (INF), the publisher of Lloyd’s List, is open to a sale of the company and is biding its time on buying and selling assets with the weak economy unlikely to improve next year, its chief executive officer said.
Informa would consider a takeover by another company in the data-aggregation and events business, Peter Rigby said in an interview. While Informa said in February that it aimed to sell non-core assets such as a U.S.-based computer-program management business, potential buyers aren’t willing to pay enough to make it worthwhile, Rigby said.
“There’s not been much action since the summer really because everybody is petrified about what’s going to happen next,” Rigby, 56, said in Bloomberg’s London office on Oct. 7. “There is no sign that 2012 will be a better year than 2011.”
The company’s board spurned a 1.9 billion-pound ($3 billion) takeover bid from buyout firms led by Providence Equity Partners Ltd. in 2008. Informa hasn’t been approached since 2008, Rigby said. Zug, Switzerland-based Informa’s shares, down 17 percent this year, trailed peers such as Reed Elsevier Plc (REL), owner of the LexisNexis database, and Pearson Plc. (PSON)
“A potential cost-savings-driven merger with Springer Science+Business Media GmbH should not be ruled out,” Johnathan Barrett, an analyst at Singer Capital Markets Ltd., wrote today in a note, referring to Rigby’s comments. “It would appear that the cash generation points to solid trading.” Barrett recommends buying Informa shares and has a price target of 522 pence.
Informa rose 3.3 percent to close at 350.1 pence in London trading, valuing the company at 2.1 billion pounds. The FTSE 250 Index, which includes Informa, advanced 1.8 percent, while Reed Elsevier climbed 0.7 percent.
In December 2009, Informa said it had ended talks to acquire Springer Science, a German academic publisher.
Informa’s events unit, which hosts conferences such as the Monaco Yacht Show, is its biggest division, accounting for almost half of the company’s revenue in the first half. Informa also generates sales from the academic and professional information businesses, which publish text books and software to train workers and students, and from maintaining databases including financial and legal information.
Informa will probably end this year with a ratio of about two times net debt to earnings before interest, taxes, depreciation and amortization, the lower end of its forecast, said Rigby. Cash and cash equivalents rose 80 percent to 36.7 million pounds in the 12 months ended June 30 and the company obtained a 625 million-pound credit facility this year.
Rigby said Informa has no immediate plans to return its tax base to the U.K. from Switzerland. If the U.K.’s Controlled Foreign Corporation tax regulations are amended, the company may reconsider its position, depending on how it affects earnings from other countries, he said.
“We don’t get taxed twice on profits” in Switzerland, Rigby said. Currently, a move to the U.K. would hurt profit, and by being based in Zug “we’re saving cash,” he said.
Informa bought two events businesses in Brazil for about 81 million pounds in the first half, and is expanding in emerging markets where companies rely on trade shows for networking and information not provided elsewhere. Future acquisitions will probably be similarly modest, Rigby said.
“I don’t know if you would necessarily buy anything right now if you didn’t need to,” Rigby said. “There’s quite a lot available, but the answer is it doesn’t necessarily meet our criteria. It’s too expensive for now.”
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