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.
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