Informa raises less than expected to acquire US events business

Business publisher Informa has drummed up a less-than-hoped £207m from institutional investors as it added to its exhibitions businesses with the cash acquisition of Hanley Wood for £237m.

The publishing, training and events group said earlier on Tuesday that it intended to raise £275m to pay down debt and complete the acquisition, but by mid-afternoon announced it had completed its placing short of this mark at the price of 460p per share.

Informa, which at the end of June had net debt of £794.8m, has agreed to take over leading US trade show operator Hanley Wood Exhibitions to strengthen its growing Global Exhibitions business, which was around 15% of profit in 2013, and as part of management's 2014-2017 'growth acceleration plan'.

Hanley brings 17 trade shows in the construction and real estate vertical, including leading brands such as World of Concrete, Greenbuild and The International Surfaces Event.

Chief executive Stephen Carter said: "This acquisition enhances our presence in North American construction and real estate, where we will gain a strong portfolio of brands and shows that serve this growing industry.

"The transaction is expected to be earnings-enhancing in 2015 as we continue to implement the group-wide growth acceleration plan."

Market confidence in the North American construction and real estate market remains strong, the company added, which was reflected in encouraging forward bookings across the portfolio of exhibitions being acquired.

"Strong underlying momentum is expected to drive ongoing attractive levels of growth in the business, which should ensure that the acquisition is earnings-enhancing in Informa's first full year of ownership."

After the deal, the Americas region will account for almost half of Informa’s global exhibitions revenue on a pro-forma basis.

In the 12 months to end March 2015, Hanley Wood sales are expected to be £41m with adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of £21m, meaning the implied margin is a high 51%.

Broker Investec suggested the price "looks relatively high in our view" at 11 times EBITDA on this year’s suggested numbers. "If we assume 10%-20% EBITDA growth, this multiple would fall to a still chunky 10-9 times."