June 18, 2008 / 8:14 AM / 12 years ago

UPDATE 2-Informa slumps despite Providence, Carlyle interest

(Adds further details)

By Kate Holton and Mathieu Robbins

LONDON, June 18 (Reuters) - Private equity groups Providence Equity Partners and Carlyle Group [CYL.UL] may bid for British media group Informa (INF.L), but another possible suitor Cinven is not currenly looking at it, sources familiar with the matter said.

Events organiser and publisher Informa said on Tuesday it had received an approach from a third party which it did not identify, just as talks over a possible merger with rival UBM UBM.L had ended.

The news of the end of UBM talks sent Informa’s shares down over 10 percent on Wednesday morning over concerns that private equity would struggle to secure a deal in the current credit markets, while UBM edged up.

Any deal for Informa by private equity would be one of the biggest in Europe since the credit crunch took hold. Informa had a market capitalisation of around 1.8 billion pounds ($3.51 billion) on Wednesday.

“An alternative bid approach for Informa is also not unexpected, albeit some doubts remain over the leverage capacity of private equity right now,” Dresdner Kleinwort said in a note to clients.

Sources familiar with the situation told Reuters that Carlyle and Providence were among a group of buyout firms in the very early stages of talks with Informa that could lead to a joint bid.

A separate source said Cinven, which jointly owns Germany’s Springer Science + Business Media with Candover and had been seen as a possible suitor, was not working on a bid right now.

Two further sources said private equity groups Apax and Candover were monitoring the situation as they considered their options.

Informa shares were down 9.7 percent at 424 pence at 1030 GMT.

Numis analyst Paul Richards noted that Informa shares had risen sharply since details of a possible merger with United Business Media were made public last week and said the fall on Wednesday reflected concerns about private equity deals.

UBM shares were up 0.8 percent on Wednesday.

Numis said a private equity bid would need to be pitched around 500 pence to succeed, representing a 30 percent premium on the price before the merger talks with UBM were announced.

“As a business built by acquisition/merger, Informa could be dismantled into more manageable pieces relatively easily in our view,” Numis said in a note to clients. “For example, Springer may enter a consortium to secure the Scientific assets.”

Informa rejected a bid from Springer in 2006 saying at the time that the 630 pence offer undervalued the company.

“Springer offered 630 pence for Informa in Oct 2006 and we therefore believe that they could become involved in a consortium given the significant (around 50 million pounds ($97.56 million)) cost savings that could be achieved from the Academic businesses, UBS said in a note.”

Analysts at Credit Suisse said there could be some relief for UBM shareholders that it had not gone “toe-to-toe” with Informa’s potential private equity suitors.

“We believe UBM’s approach to Informa signals a robust trading update is coming up, in our view, since the all-share proposal would be counter-productive if this was not the case,” they said.

Informa declined to comment further on the approach and none of the private equity parties could immediately be reached for comment. (editing by Rory Channing and Elizabeth Fullerton)

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