Informa needs £1.5bn for Springer bid
Publishing giant Informa will need to raise as much as £1.5bn to secure a takeover of German academic journals group Springer.
Cost-savings: Informa boss Peter Rigby
The Lloyd's List publisher revealed that it has entered bid talks with its debt-laden rival, which was put up for sale by its private equity owners Candover and Cinven earlier this year.
The British firm is currently pouring over swathes of 'due diligence material' with a view to launching a formal offer, it admitted yesterday.
The revelation raised the prospect of a mammoth cash call at Informa, which closed down 27p, or 9%, at 285p.
Analysts warned that the move for Springer could be a step too far for the acquisitive Informa, which is struggling under a £985m overdraft of its own.
On top of the mooted £360m price tag, Informa would have to take on Springer's £2bn debt pile.
Gareth Davis at Investec stock broker said: 'We have to question whether Informa will be able to raise the financing to do this deal.'
Few in the publishing industry doubt that Informa boss Peter Rigby would be able to wring out big cost savings by bringing together the two giants.
And beefing up its journals division, which enjoys highly predictable cash flows, would further reduce Informa's exposure to volatile advertising spending.
But to keep the combined group's debts at a manageable level, Informa would have to raise between £1bn and £1.5bn.
Coming just six months after a £254m cash call, many shareholders would baulk at writing out another hefty cheque to Rigby.
Roddy Davidson of Altium said: 'We suspect that investors would be reluctant to provide further funding unless a compelling proposition can be hammered out.'
Informa admitted: 'There can be no certainty than an agreement will be reached.' Informa's approach marks a dramatic role reversal for the UK events and publishing firm.
At the height of the buy-out boom in 2006, it fought off a £2.7bn takeover bid by the German firm.
Rigby also batted away a £1.9bn takeover bid from a buy-out consortium comprising Blackstone Providence and Carlyle last year.
Candover and Cinven have already pocketed more than £850m from their original £550m investment in Springer.
But the collapse in the credit markets forced the two private equity firms to slash the value of the Springer business.
Most watched Money videos
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- Dean Dunham: Entitled to comparable replacement concert tickets?
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Land Rover unveil newest all-electric Range Rover SUV
- Blue Whale fund manager on the best of the Magnificent 7
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Mini celebrates the release of brand new all-electric car Mini Aceman
- Mini Cooper SE: The British icon gets an all-electric makeover
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Volvo's Polestar releases new innovative 4 digital rearview mirror
- Mercedes has finally unveiled its new electric G-Class
- BUSINESS LIVE: UK GDP grows 0.6%; IAG profits take off;...
- Should the Bank of England have cut interest rates...
- My favourite 20 new cars for under £20,000 - by the...
- BA owner IAG profits climb more than sevenfold
- SMALL CAP MOVERS: Light Science Technologies sales flourish
- How criminals could use AI to scam Britons - and what can...
- Rightmove expects weaker ad revenue growth as more...
- Vodafone told to boost security as £15bn Three merger is...
- Bank of England paves way for Britain to cut interest...
- ITV hopes for summer ad boom as it continues to reel from...
- Takeover target Wood Group hit by slump in revenues as...
- Cameron left red-faced as Greensill sues Government over...
- BBVA goes directly to shareholders as it steps up bid for...
- Bailey pulls his punches on interest rates yet...
- MARKET REPORT: North Sea giant Harbour closes in on £9bn...
- Some estate agents only put forward offers from buyers...
- Families with TWO retired generations will surge to one...
- My uncle has £14,000 in Dart Charge fines despite trying...