Not many companies model themselves on the CIA. But that’s Informa for you. It runs with the motto: “Connection. Insight. Advantage.”
So, with that sort of intelligence, you’d think it must have already known how the market would react to its £3.9 billion pop at events rival UBM, first unveiled a fortnight ago. Apparently not. Even Lord Carter of Barnes, the Informa boss, couldn’t have expected the shares to dive 6 per cent on the day to 705p — and then continue their slide to 684¼p by last Friday night. It had the effect of cutting the value of Informa’s largely paper bid for UBM from a mooted 971p a share to barely £9.
There was plenty to spook investors, particularly the absence of any hard numbers on synergies: one legacy of the bid leaking. But there were other concerns. Not only did the price look toppy, Lord Carter had sprung a reshaping of Informa. Instead of a group balanced around business data, academic publishing and exhibitions, it would be 55 per cent skewed to events: the result of buying the pure-play UBM, home of such great days out as Test Kit Japan, Care Welfare Robot & Device Expo and Tools & Hardware Surabaya.
So it was with some relief yesterday that his lordship could at last produce his agreed offer and, crucially, promise £60 million of cost synergies: £10 million more than most analysts were expecting. Costing a one-off £80 million cash to deliver, Lord Carter is reckoning on an initial £50 million in the 2019 financial year, enough to boost earnings per share in year one. About 330 of the 11,000-strong workforce will go.
Even so, as he points out, this isn’t a cost-cutting caper. In the long run, it’s the unquantified revenue synergies that’ll count. Scale helps in events, not least through what he calls “geocloning”: taking a lucrative exhibition in one country to another. The geographic mix looks good, too, with UBM adding extra China presence. And the combined group, valued at £9.5 billion, will have clout in faster-growing event markets, such as India, the Middle East and southeast Asia. Informa also gets more chance to cross-sell its business data and publishing activities to event customers.
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“A full price, but strategically sensible,” was the verdict of Numis analysts. Yet Lord Carter still has persuading to do. Raising leverage to three times net debt, partly to fund a 163p-a-share cash payment to UBM investors, is a bit racy. And a mere 0.9 per cent rise in Informa shares to 693½p was no ringing endorsement. It leaves the bid valuing UBM at 914p: just above last night’s 907p close, up 4 per cent. A better effort, then, from his lordship — though not the full Informa CIA.
Held to account
As jibes about the Financial Reporting Council go, “useless” and “toothless” look pretty polite. But it’s still a bit rich for those 20:20 hindsight MPs on the pensions and business committees to be blaming Stephen Haddrill for Carillion’s collapse.
Yes, the FRC boss admitted the regulator had been monitoring the bust construction outfit since July. But who hadn’t? It had just come up with a howitzer profits warning, a £845 million hole in the contract book and a share price down 70 per cent in three days. Even the FRC can spot that — about two years later than the hedge funds, who’d borrowed a quarter of the stock to short the shares to death.
True, the FRC challenged Carrillion’s 2015 accounts on around “a dozen points” of disclosure. But that’s not the same as detecting a company going bust. And the last outcome anyone wants from the Carillion affair is the one Mr Haddrill is rooting for: more “powers” for the FRC. It can’t use the powers it’s got to hold auditors to account, as famously proved with HBOS — an inquiry it started eight years after the event on the orders of the Treasury committee and then produced a whitewash. The same auditor, KPMG, is central to the Carillion fiasco. And Mr Haddrill is right to ask whether it should have breezily accepted the directors’ view that even after July the group was a “going concern”. Even so, it’s clear where the real blame lies: the 169 directors across 16 Carillion companies, led by Richard Howson and chairman Philip Green, identified by the Insolvency Service. Way beyond Mr Haddrill’s brief.
Ryanair’s reverse
Not icy Davos again. No, nothing as bad as that: merely hell, Ryanair-style. It’s just signed a recognition agreement with the UK pilots union Balpa: the sort the airline’s boss, Michael O’Leary, has spent 20 years ruling out. Or as he put it: “Hell will freeze over before that happens.”
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True, he was specifically talking about recognition for Ireland’s pilots union. But for years they were all the same to Mr O’Leary, sticking to “Ryanair’s principle of only dealing with its own people directly”. A pilot shortage and last autumn’s chaotic flight cancellations seem to have modified his views. Indeed, the airline’s now moaning about some “EU countries where we are still waiting for a response to our recognition proposals”. Funny that. Only last year Mr O’Leary happily declared: “The pilot unions across Europe are a busted flush.”
Food for thought?
More meandering motoring surveys. Apparently a third of drivers use their cars as an “extension of their kitchen”, with supplies of “tinned foods, snacks, soft and alcoholic drinks”. Enough, anyway, for Stephen Wornham to worry that “Brits may be taking this to extremes” and stocking more food than safety kit. Who he? MD of Road Safety Designs, developer of the Brite Angle safety triangle.
