Wednesday newspaper share tips: Sale of PR Newswire makes UBM look attractive long term

The FTSE 250 company agreed to the $841m (£554m) sale to US group Cision, leaving it to focus on its events business.

UBM, which should net an impressive £498m after costs, plans to reward shareholders with a £245m special dividend, with the remainder reinforcing its warchest for further bolt-on acquisitions.

The agreed sale will comprise $810m in cash and $31m of preferred equity and must be agreed by UBM's shareholders, with Cision a private-equity-owned company.

The deal is expected to dilute earnings per share initially, but the company plans to conduct a share consolidation along with the payment of the special dividend.

Tempus noted that the problem with PR Newswire, which circulates press releases and other media material, is that it didn’t fit within the group and that growth was well behind the exhibition division of the group.

While the deal will hit the company’s earnings by a fifth, it said it will free up cash for buying more exhibitions.

But Tempus said there are two caveats.

“Exhibitions are a sellers’ market, because all the big operators are buying.

“It makes sense to have a number of shows in the same country, and to be in as many growing economies as possible.”

On top that, it said it isn’t the best time to increase exposure to a sector reliant on world trade.

“Still, if we all worried about that, no one would do anything,” Tempus said, telling readers it is worth it in the long term.

Over in The Telegraph, Questor is concerned with the price of gold when it comes to H&T Group.

Spot gold has fallen from in the last five years from a peak of $1,882.96 in September 2011 to current prices of $1,064.09.

The pawnbroking sector has also been shaken by badly timed shop expansion plans and gold buying programmes.

Questor noted H&T has weathered the storm, but has more competition from the likes of payday lending and peer-to-peer finance companies.

It has focused on cutting costs and improving its loan quality, which has led to a 30% rise in pre-tax profits to £2.6m.

Questor said while the company is responding to a challenging market, “it is difficult to see how these can compete with larger scale competitors”.

With a £7m target for full-year pre-tax profits looking challenging with the falling price of gold, Questor rated it at ‘sell’.