US Edition Peter Rigby, the gym-loving chief executive of Lloyd’s List publisher Informa, is well known for his positive nature. However, the jolly, spiky-haired Northerner can be forgiven if his enthusiasm is dwindling given the performance of the group’s shares in recent weeks. The shares have more than halved in value since the private equity consortium bidding for the company withdrew its offer.
Informa, which rejected a 450p-a-share offer from Providence, Carlyle and Blackstone, has been propped up in recent months by bid hopes. However, with no other offers in sight the market is nervous about its high debt levels. The company’s existing net debt stood at £1.2bn as of June 30, down slightly from £1.24bn at the end of the last fiscal year. Its market cap currently stands at £876m.
However, with media stocks hit by the advertising downturn, Informa is in a unique position in that its exposure to the volatility of the advertising market is low. The group said yesterday that full-year results are in line with expectations, with trading remaining strong despite the economic conditions.
Sales in the company’s events business are up 9pc, while publishing sales increased by 10pc in the year to date. With more than 40pc of overall profits in US dollars, a continuation of the dollar’s recent strengthening against sterling through 2009 would also provide a further boost.
There is also a glimmer of hope that the group will again become the subject of M&A activity within the next year. This could mean reopening merger talks with United Business Media – which would decrease its debt load, but increase its exposure to the advertising market - or private equity making another approach when debt markets settle. Until then, hold.