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UK events organiser UBM to buy Advanstar for $972 million

10/01/2014 | 06:46am EDT

(Reuters) - Communications and events company UBM Plc (>> UBM Plc) said it would buy trade show organiser Advanstar Communications for $972 million (600.11 million pounds), becoming the top events organiser by revenue in the United States, but its shares fell on concern it had overpaid.

(Reuters) - Communications and events company UBM Plc (>> UBM Plc) said it would buy trade show organiser Advanstar Communications for $972 million (600.11 million pounds), becoming the top events organiser by revenue in the United States, but its shares fell on concern it had overpaid.

News that UBM would fund the deal through a 563 million pound rights issue also dampened sentiment.

Reuters reported last month that UBM was looking to buy Advanstar for about $900 million.

Many in the market had thought the company would pay for Advanstar by selling its PR Newswire business, analysts said.

Investec analyst Steve Liechti said the deal was "a big and brave strategic move" for Chief Executive Tim Cobbold, who joined from currency printer De La Rue Plc (>> De La Rue plc) in May.

"Key questions now relate to the quality and growth potential of the asset acquired given what looks a high price paid," Liechti said in a note.

UBM's shares fell as much as 4.6 percent, making them the top percentage loser on the FTSE-250 midcap index.

Up to Tuesday's close, the company's shares had fallen 11 percent this year, largely due to the pound's strength. About 90 percent of UBM's revenue comes from outside the UK.

UBM said the deal would immediately add to earnings upon completion at the end of the year and add about 135 million pounds to events revenue in 2015.

Liberum analysts said the deal made strategic sense.

"It weights UBM towards North America and away from China, where there have been concerns re competition; it makes it more weighted towards Events, which should drive a re-rating; it should reduce its leverage; and it is accretive," Liberum said in a note.

"...We see management's purchase of Advanstar and its implications as heralding something of a new dawn for UBM."

Advanstar operates 54 trade shows and about 100 conferences annually, including the biannual Magic fashion trade show in Las Vegas, the largest U.S. fashion convention.

Cobbold told Reuters the deal would give UBM a 2 percent share of the fragmented U.S. events market, overtaking Emerald Expositions and Reed Elsevier Plc's (>> Reed Elsevier plc) exhibitions unit.

The company's events revenue from the United States will increase to just over 40 percent from about 26 percent once Advanstar is absorbed, Cobbold said.

UBM bought Advanstar from hedge fund Anchorage Capital Group and private equity firms Ares Management LP and Veronis Suhler Stevenson. The company has changed hands several times over the years between various private equity firms.

JP Morgan advised UBM on the financial aspects of the deal, while JP Morgan and Credit Suisse are joint brokers and underwriters for the rights issue.

UBM shares were down 4.2 percent at 558.5 pence at 1005 GMT (11:05 a.m. BST).

(Additional reporting by Karen Rebelo and Richa Naidu in Bangalore; Editing by Sunil Nair and Ted Kerr)

By Noor Zainab Hussain


ę Reuters 2014
Stocks mentioned in the article
ChangeLast1st jan.
DE LA RUE PLC 1.78% 114.2 Delayed Quote.-26.51%
FTSE MID 250 INDEX -0.58% 19949.44 Delayed Quote.-14.54%
ONEX CORPORATION -1.39% 72.38 Delayed Quote.-26.07%
RELX PLC -0.43% 2290 Delayed Quote.-4.66%
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Sales 2022 381 M 473 M 473 M
Net income 2022 20,9 M 25,9 M 25,9 M
Net Debt 2022 91,8 M 114 M 114 M
P/E ratio 2022 10,8x
Yield 2022 -
Capitalization 223 M 276 M 276 M
EV / Sales 2022 0,83x
EV / Sales 2023 0,77x
Nbr of Employees 2 239
Free-Float 96,7%
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Last Close Price 114,20 GBX
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Clive Vacher Chief Executive Officer & Executive Director
Rob Harding Chief Financial Officer & Executive Director
Kevin Loosemore Chairman
Maria da Cunha Independent Non-Executive Director
Nicholas Paul Seaton Bray Independent Non-Executive Director
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