Informa, the UK-listed information provider, confirmed that Germany’s academic publisher Springer SB Media, owned by buyout firms Cinven and Candover, has approached its board to buy the company.
Informa stressed that discussions with Springer Science+Business Media (Springer SB Media) are at an extremely early stage. On the back of the news, Informa’s shares jumped 10% to £5.50 per share last week, giving the company a market capitalisation of £2.3bn and an enterprise value of about £3bn.
But Informa’s shares are not trading anywhere near the expected offer price, reflecting scepticism in the market about the likelihood of a successful takeover bid. The fact that Springer SB’s controlling shareholders Cinven and Candover left it with a high gearing is unlikely to help matters.
“If the market truly thought that there was a strong probability of a cash offer, then the (Informa) share would be trading a lot higher,” says Alex de Groote of Panmure Gordon & Co, “we would be very surprised if Informa’s management did not value their company at least 650p per share.”
Informa and Springer SB are understood to have been in sporadic discussions for a long time, although Springer SB was historically seen as the takeover candidate.
Springer SB emerged in September 2003, following two transactions with a combined value of €1.65bn. First, Cinven acquired Kluwer Academic Publishers (KAP) for €600m from Dutch parent Wolters Klüwer in January 2003. Subsequently BertelsmannSpringer was acquired in September 2003 from German parent Bertelsmann for €1.05bn and merged with KAP.
Since then the company has been through three rounds of refinancing. In June 2006, it completed a €1.945bn recapitalisation translating to an aggressive leverage of 7.4x total net debt to Ebitda, according to Thomson Financial’s IFR publication. By comparison, Informa has a more modest gearing of 4.9 times debt to EBITDA.
It is understood that Cinven and Candover, which hold a 90% stake in Springer, already realised their equity investment amounting to a combined value of €600m in a second refinancing of Springer SB in July 2005, valuing the company at €2.5bn-€3bn, including debt.