11th Apr 2022 18:04
(Alliance News) - Ascential PLC entertained the idea of a possible split on Monday, lifting the Cannes Lions owner's shares and stoking speculation it will become the latest London-listing to turn to a separation.
Ascential shares closed 2.5% higher at 339.25 pence each in London on Monday.
The firm, acknowledging media reports, said it "regularly evaluates" its organisational and capital structure.
The business-to-business media and events firm said: "Ascential confirms that it is in the early stages of evaluating the merits of a managed separation of certain assets of the group."
This followed Sky News reporting on Saturday that Ascential was looking at demerging its digital operations and listing them separately in the US.
"As discussions are exploratory at this stage, they may or may not lead to the board making a decision to undertake a managed separation of these businesses in due course. The board is committed to open and transparent engagement with all of its stakeholders and will communicate further if and as appropriate," the company added.
The digital arm is Ascential's "fastest growing...most attractive area", analysts at Shore Capital Markets commented.
The unit includes data analytics and e-commerce.
If it is spun-out, it would leave Ascential with just its Retail unit and its Financial Services arm. The Retail division includes the Cannes Lions festival, focused on creative communications and advertising, while Financial Services features the fintech event Money 20/20.
On the potential demerger, analysts at Shore said: "We are not hugely surprised to note this development given Ascential's management's long-standing commitment to maximising shareholder value."
However, an Ascential without the digital arm would be a "significantly less attractive business for shareholders" that would not hold shares in the demerged assets.
Ascential would not be the first to perform a demerger, AJ Bell analyst Danni Hewson commented.
"The past five to 10 years have seen quite a few companies split into two or three parts as a well of unlocking hidden value, such as Anglo American, Prudential and BHP. The argument is that certain assets might be worth more as standalone entities rather than part of a bigger corporation. Splitting up also enables each segment to have a tighter management focus rather than a series of divisional bosses being told what to do by the ultimate parent company."
Anglo American PLC recently separated its Thungela Resources Ltd South African coal mine division, Prudential has demerged Jackson and M&G PLC, while BHP Group Ltd is in the process of merging its oil and gas assets with Sydney-listed Woodside Petroleum Ltd.
By Eric Cunha; [email protected]
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