Informa is in talks to buy Springer Science and Business Media in a €2.6bn deal including debt that would boost its more resilient academic publishing unit but could require a new rights issue to fund it.
If agreed, the acquisition would allow Springer’s private equity owners Candover and Cinven to finally offload the debt-ridden business, after they started peddling the German academic publisher earlier this year.
The two owners initially gave a valuation of around €1bn but at the end of June Candover’s own valuation gave the group an equity value of £250m.
Analysts and sources familiar with the situation said they now expected the equity of the group to be around €400m with debt of €2.16bn.
“We can see why this deal could make sense,” Altium Securities analysts said in a note. “However, we would be wary of the group overstretching itself financially and suspect investors may be reluctant to provide further funding.” Informa said it expected any takeover to generate significant savings thanks to cost cuts.
Informa, which owns a range of academic and professional publications and runs conferences and training courses, offered a fully underwritten rights issue in May to pay down debt.
It said in July it had reduced its net debt to £984.5m, giving it a net debt to earnings before interest, tax, depreciation and amortisation ratio of 3.
Analysts expected Informa to need to raise capital, with a Citi research note anticipating a capital increase of between £1bn and £1.5bn, up to six times the amount the firm raised in May to cut debt.