UBM Share News (UBM)

(ShareCast News) - UBM has agreed the sale of its PR Newswire arm for $841m (£554m) to US group Cision, leaving it to focus on its events business.UBM, which should net an impressive £498m after costs, plans to reward shareholders with a £245m special dividend, with the remainder reinforcing its warchest for further bolt-on acquisitions.The agreed sale will comprise $810m in cash and $31m of preferred equity and must be agreed by UBM's shareholders, with Cision a private-equity-owned company. The deal is expected to dilute earnings per share initially, but the company plans to conduct a share consolidation along with the payment of the special dividend."Today's announcement represents a significant step in the execution of UBM's 'Events First' strategy, the objective of which is to become the world's leading focused B2B Events business," said UBM chief executive Tim Cobbold, adding that the board was confident the transaction represented excellent value for shareholders. He added that, following the disposal, more than 80% of UBM's continuing revenues will be generated in the high-growth and high-margin events sector. "In addition, the retained sales proceeds will increase our capacity to invest in bolt-on acquisitions to strengthen the portfolio and grow the business faster, whilst maintaining appropriate financial discipline."Analysts at Peel Hunt and Investec said the deal looked at a good price for UBM.Investec analyst Steve Liechti said it was slightly above his sum-of-the-parts valuation and "a decent number in our view", with the special dividend "fair" given the over-raise on the Advanstar rights issue in 2014. He added that the transaction "looks highly dilutive to EPS" given PRN profit and no US tax, though the share consolidation will offset this as would deployment of net proceeds. Pre-consolidation he expects pro forma 2017 EPS dilution of circa 20%, while a share consolidation should bring this to 10-to-15% to circa 38p, from 42p before.Jamie Constable at N+1Singer calculated "very crudely" that the initial dilution would probably be even higher, circa 25% due to the tax impact, but if management reinvest around £150m of the £253m earmarked for acquisitions this would roughly halve the dilution."This looks a good outturn with quality of earnings improving and growth potential and the overall rating for the group should rise," he said.Shares in UBM were 2.3% higher at 483.8p by 0910 GMT on Tuesday.