LONDON (Alliance News) - Ascential PLC said Tuesday it will sell its exhibitions business to ITE Group PLC for GBP300 million in cash after a strategic review.
ITE will acquire the business - which includes the Education Show, CWIEME and Pure - on a cash and debt free basis.
Ascential chose to dispose of its events business after a strategic review began in February.
"The strategic review of the Exhibitions business was undertaken to ensure that we prioritize our time and capital on enabling our customers to succeed in the digital economy," Ascential Chief Executive Officer Duncan Painter said. "We are therefore pleased to have found a good home and achieved a fair price for the Exhibitions business. Winning in the digital economy is one of the biggest challenges our customers face, and we want to ensure we are at the forefront of helping them achieve this."
Ascential plans to use the proceeds from the sale to fund its growth plans in its core business areas. As such, over the short to medium term the proceeds will be used to - amongst other things - allow for acquisitions to this end.
The transaction - which is conditional on shareholder approval - is expected to complete in July 2018.
In 2017, Ascential's exhibitions business generated adjusted earnings before interest, tax, depreciation and amortisation of GBP23.3 million on revenue of GBP82.9 million. For comparison, Ascential as a whole generated adjusted Ebitda of GBP119.5 million on revenue of GBP375.8 million in 2017. Pretax profit stood at GBP33.1 million.
In a separate announcement Tuesday, ITE said it will fund the deal through a rights issue. The events firm said it plans to raise around GBP315 million through a fully underwritten rights deal.
ITE also plans to extend its existing debt facility by GBP50 million. Should this be achieved, it will reduce its rights issue to cover the deal to GBP265 million.
ITE expects the deal to be earnings enhancing in the first full year of ownership, expected to be financial 2019. It also expects to be able to maintain its current dividend policy and generated pretax gross synergies of GBP4 million to GBP5 million through the elimination of cost duplication.
"Today, we have announced an agreement to acquire a highly complementary portfolio of exhibitions from Ascential," ITE Chief Executive Officer Mark Shashoua said. "Each show is market-leading and two are truly global. This acquisition accelerates our strategy of becoming product-led and building a portfolio of content-driven, must-attend events regardless of geography."
"A number of our senior management team, including myself, know these assets extremely well and see a clear opportunity to drive cost synergies, and provide the investment, operational rigour and international platform required to drive growth," Shashoua added.
Shares in Ascential were 0.1% lower at 420.20 pence on Tuesday, ITE 2.2% lower at 144.60 pence.
