1st Jun 2005 07:05
T&F Informa PLC1 June 2005 1 June 2005 T&F Informa plc Proposed £768 million acquisition of IIR extends T&F Informa's multi-format approach to provision of specialist information Proposed 2 for 5 Rights Issue at 265p to raise £311 million net T&F Informa plc ("T&F Informa"), the international specialist informationprovider, announces the proposed acquisition of IIR Holdings Limited ("IIR") forcash consideration of US$1.4 billion (£768 million). • Highly complementary acquisition, adding significantly to T&F Informa's events business, providing immediate critical mass in thecustomised performance improvement market, substantially expanding T&F Informa'sexisting North American presence and further extending its geographic reach intoemerging economies • IIR organises events including conferences, seminars andexhibitions and through its performance improvement business providesperformance analysis, diagnostics and customised training services to corporatesand governments - over 1,400 conferences per year worldwide - US-based performance improvement services to approximately half theFortune 500 and a broad cross-section of US Government departments • Recent strong growth by IIR with revenue in the year to 31December 2004 of $572.6 million (£312.9 million) up 20.2% (including a 5 monthcontribution from the acquisition in 2004 of Robbins-Gioia of $42.5 million(£23.2 million)) and EBITA of $87.8 million (£48.0 million) up 105.3% (includinga 5 month contribution of $7.0 million (£3.8 million) from Robbins-Gioia).Further good revenue growth expected in current year and beyond(1)(1) • Clear strategic and commercial logic for this uniqueacquisition - Continued development of T&F Informa's multi-format approach to theprovision of specialist content through publishing, events and throughperformance improvement services - Strong geographic and sector fit with T&F Informa's existing eventsoperations - Entry into the high growth and resilient performance improvement market - Accelerated organic revenue growth prospects - Significant improvement in cross-marketing through doubling of databaseto more than 20 million names - Maintenance of well-balanced portfolio of products combiningoperationally geared businesses and non-cyclical businesses with repeating andresilient revenue streams • Acquisition is expected to enhance significantly T&FInforma's earnings per share (before amortisation of goodwill and exceptionalitems) in the first full financial year(2)(2) • Acquisition is expected to produce annualised efficiencysavings of £8 million in 2006 and £11 million by 2007 mainly from property, ITsystems, procurement and central overheads savings • Current year trading has started well for T&F Informa withperformance in-line with its expectations, reflecting the growth in a number ofits key markets. IIR's first quarter trading has been strong • Consideration for the acquisition to be funded initially infull from a new debt facility and subsequently in part from a fully underwritten2 for 5 Rights Issue at 265p per Ordinary Share to raise £311 million, net ofexpenses • Greenhill has acted as exclusive financial adviser on theacquisition, Hoare Govett is acting as sole underwriter and broker to the RightsIssue and ABN AMRO Bank is acting as mandated lead arranger of the debt facility Commenting on the Acquisition, Peter Rigby, T&F Informa's Chief Executive said: "The acquisition of IIR significantly extends our events business and gives us asubstantial and immediate position in the rapidly growing performanceimprovement market. We know the IIR events business well and it will clearlycomplement our existing events business, geographically and by sector. IIR'sperformance improvement business, with its highly respected brands, strongmarket positions and high cash generation is a unique opportunity to enter anattractive market which we see as offering strong recurring revenue streams. We expect the acquisition of IIR to be significantly earnings enhancing. We areacquiring a complementary business which is well established in growing marketsectors and which is highly cash generative. I look forward to welcoming the employees of IIR into the newly enlarged T&FInforma Group." This summary should be read in conjunction with the full text of the followingannouncement. Appendix I contains the definitions of certain terms used in thisannouncement, Appendix II contains summaries of the Acquisition Agreement andNew Facility Agreement. A presentation to analysts will be held at ABN AMRO,250 Bishopsgate, London EC2M 4AA at 10:00 a.m. (London time) today. Press Enquiries: T&F Informa +44 20 7017 5000Peter RigbyDavid GilbertsonAnthony Foye Greenhill +44 20 7440 0400Financial adviserSimon BorrowsPeter BellGregory Miller Hoare Govett +44 20 7678 8000BrokerSara CoghillAndrew ChapmanCaroline Griffiths Financial Dynamics +44 20 7831 3113Press RelationsTim SprattCharles Palmer (1) Financial information regarding IIR has been extracted from the auditedconsolidated financial statements of IIR Holdings Limited and adjusted toreflect businesses and assets that will be transferred out of IIR prior tocompletion of the Acquisition Agreement. This financial information is subjectto further adjustment to present it on a basis consistent with T&F Informa'saccounting policies and International Financial Reporting Standards (IFRS). Itis not anticipated that other than as disclosed in this announcement theseadjustments will be material. A circular containing a prospectus will be postedto shareholders in due course which will include adjusted financial informationrelating to IIR's three year history. 2 This statement should not be interpreted to mean that the future earnings pershare of T&F Informa will necessarily match or exceed its historical publishedearnings per share. Greenhill & Co. International LLP, which is regulated in the United Kingdom bythe Financial Services Authority, is acting for T&F Informa plc and no one elsein connection with the Acquisition and will not be responsible to anyone otherthan T&F Informa plc for providing the protections afforded to clients ofGreenhill & Co. International LLP or for providing advice in relation to theAcquisition or the Rights Issue. Hoare Govett Limited, which is regulated in the United Kingdom by the FinancialServices Authority, is acting for T&F Informa plc as sole broker and underwriter(in connection with the Rights Issue) no one else in connection with theAcquisition and Rights Issue and will not be responsible to anyone other than T&F Informa plc for providing the protections afforded to clients of Hoare GovettLimited or for providing advice in relation to the Acquisition or the RightsIssue. The release, publication or distribution of this announcement in certainjurisdictions may be restricted by law and therefore persons in suchjurisdictions into which this announcement is released, published or distributedshould inform themselves about and observe such restrictions. THIS ANNOUNCEMENT DOES NOT CONSTITUTE, OR FORM PART OF, AN OFFER TO SELL OR THESOLICITATION OF AN OFFER TO SUBSCRIBE FOR OR BUY ANY SECURITIES, NOR THESOLICITATION OF ANY VOTE OR APPROVAL IN ANY JURISDICTION, NOR SHALL THERE BE ANYSALE, ISSUE OR TRANSFER OF THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT INANY JURISDICTION IN CONTRAVENTION OF APPLICABLE LAW. NOT FOR DISTRIBUTION OR TRANSMISSION, DIRECTLY OR INDIRECTLY, IN OR INTO THEUNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OR IRELAND OR THE REPUBLIC OFSOUTH AFRICA. Proposed £768 million acquisition of IIR extends T&F Informa's multi-format approach to provision of specialist information Proposed 2 for 5 Rights Issue at 265p to raise £311 million net Introduction The Board of T&F Informa plc ("T&F Informa") announces the proposed acquisitionof IIR Holdings Limited ("IIR") for a cash consideration of US$1.4 billion (£768million). IIR's events division organises conferences, seminars and exhibitions andthrough its performance improvement business provides performance analysis,diagnostics and customised training services. In the year to 31 December 2004IIR increased revenues to $572.6 million (£312.9 million) and improved EBITA to$87.8 million (£48.0 million)(3)(3). The Directors believe that the Acquisition represents a unique opportunity for T&F Informa to advance its strategy of developing its multi-format approach tothe provision of specialist content through publishing, events and throughcustomised performance improvement services. The Acquisition enables T&FInforma to enter the growing performance improvement market, giving scale andexcellence in an important information delivery area and providing opportunitiesto leverage T&F Informa's industry sector expertise in IIR's performanceimprovement markets. Both IIR's and T&F Informa's events divisions have operated in the events marketfor some thirty years. The two organisations' events divisions are operatedwith similar business models and management styles through highly incentivisedlocal management teams across a range of countries, closely supervised by seniormanagement. T&F Informa is therefore well placed to run a large scale eventsbusiness and understands the cultural and operational requirements of developingand managing such a business effectively. The Acquisition will continue T&F Informa's strategy of building a well-balancedand robust portfolio of assets. The Enlarged Group is expected to continue todemonstrate attractive growth characteristics during periods of economic upturnthrough its operationally geared events businesses, while exhibiting profitresilience through its more defensive publishing and performance improvementtraining businesses in times of economic slowdown. The Acquisition is expected to enhance significantly T&F Informa's earnings pershare (before goodwill amortisation and exceptional items) in the first fullfinancial year after the Acquisition.(4)(4) T&F Informa also announces that it is raising £311 million, net of expenses, byway of a proposed Rights Issue to part finance the Acquisition. The Rights Issuehas been fully underwritten by Hoare Govett. Qualifying Shareholders will beoffered New Ordinary Shares under the Rights Issue at a price of 265 pence pernew Ordinary Share on the basis of 2 new Ordinary Shares for every 5 existingOrdinary Shares. The balance of the purchase price for the Acquisition will befunded by the New Facility. In view of the size of the Acquisition, it is conditional upon, inter alia, T&FInforma shareholder approval and competition and regulatory clearances in theUnited States and Germany. The Acquisition is not conditional upon the RightsIssue becoming unconditional; in the event that the Rights Issue does not becomeunconditional, the amount being borrowed under the New Facility shall beincreased to fund the entire consideration. The Rights Issue is not conditionalupon the Acquisition completing, although it is subject to shareholder approval. In the event that T&F Informa receives the required approvals to complete theAcquisition prior to the Rights Issue becoming unconditional and payment for theshares being received, then the New Facility will be used to fund fully theAcquisition. Part of this facility will then be repaid when the proceeds of theRights Issue have been received. Development of T&F Informa The Merger on 10 May 2004 of Informa and Taylor & Francis created a newinternational force in the provision of specialist information through T&FInforma's publishing, events and data businesses employing some 4,000 people.The integration of the two groups is now complete and the combined Group hasstarted to benefit from both the revenue and cost synergies which the Mergercreated. Following the Merger, the Group's three operating divisions ofAcademic, Professional and Commercial have all performed well, combining organicgrowth with good contributions from acquisitions made in 2003, including CRCPress, PJB, MMS and from Marcel Dekker in early 2004. T&F Informa's eventsbusiness demonstrated strong growth in 2004 as a result of a recovery incorporate spending and new event launches and this has continued into 2005. Since the Merger, T&F Informa has continued its strategy of providing specialistcontent and access to academic, professional and business communities worldwide. The Merger enabled T&F Informa to do this through publications, events andtraining and through a wider geographic and sector customer base. T&F Informaalso seeks to develop and acquire strong brands looking to enhance its USpresence and further develop into other high growth economies. In 2004, T&FInforma specifically identified training as an attractive and complementarymarket where it could further exploit its specialist information offering. Information on IIR IIR's events division organises conferences, seminars and exhibitions and itsperformance improvement business provides performance analysis, diagnostics andcustomised training to primarily US based corporations and governments. In theyear to 31 December 2004 it had revenues of $572.6 million (£312.9 million) andEBITA of $87.8 million (£48.0 million) (this included a 5 month contributionfrom Robbins-Gioia (acquired in July 2004) of $42.5 million and $7.0m millionrevenue and EBITA, respectively). IIR was founded in 1973 by Irvine Laidlaw(now Lord Laidlaw of Rothiemay), its current majority shareholder and Chairman. IIR operates through two business divisions: • Events ("Events"), representing 49% of 2004 revenues • Performance Improvement ("PI"), representing 51% of 2004revenues IIR has delivered substantial growth over five years through the development andrealignment of its Events business by foc using on larger scale events, bytaking advantage of improving economic conditions to drive organic revenuesthrough new event launches and through selected acquisitions in PI. IIRoperates across 70 countries and the Group employs approximately 3,000 people.IIR has also developed its portfolio of companies to have a greater resilienceto economic cycles and enjoys strong client retention rates and repeatingrevenue streams with an increasing proportion of government revenues leading togood revenue predictability across its operations. In Events, IIR continually tests many new formats. This approach has led to thedevelopment of larger scale, industry leading 'must-attend' events whichgenerate higher delegate revenues, increased sponsor and exhibitor revenues anda higher degree of resilience in an economic downturn. These events have beenreplicated in several markets. In 2004, approximately 56% of IIR's Eventsrevenue was derived from these large-scale 'must-attend' industry events. In PI, the business enjoys long term relationships with its clients whichinclude approximately half of the Fortune 500 and a broad cross-section of USGovernment departments. This results in estimated repeat business levels ofapproximately 75%. Operating leverage in Events has enabled IIR to take advantage of improvingeconomic conditions and grow through increased demand for new events, increaseddelegate numbers and higher sponsorship levels. IIR has also grown throughacquisitions. Since 1997 it has made seven acquisitions in PI includingRobbins-Gioia in July 2004 for $80 million, AchieveGlobal in 2000 for $100million and ESI International for $50 million in 1997. IIR has developed theseacquired businesses and replicated them outside of their core US markets andsignificant opportunities remain to exploit this further. IIR's management hasconcentrated on developing the sales capacity of the businesses that it hasacquired in PI utilising its strong sales organisation. T&F Informa expects tobe able to also benefit from these skills. T&F Informa is not acquiring certain assets (the Excluded Assets) that will betransferred out of IIR by completion, such as Abbey Business Services. Financial Performance The table below presents IIR's revenues and EBITA for the two years ended 31December 2004. Financial years ended 31 December 2003 2004 * 2003** 2004** US$m US$m GBPm GBPmRevenue 476.3 572.6 293.1 312.9EBITA 42.8 87.8 26.3 48.0 * Includes a 5 month contribution from Robbins-Gioia of $42.5 million ofrevenues and $7.0 million of EBITA** Financials have been converted at the following average annual exchangerates: $1.625:£1 in 2003 and $1.83: £1 in 2004 The financial information is extracted from IIR Group's consolidated auditedaccounts which were prepared under the transitional arrangements forInternational Financial Reporting Standards as published by the InternationalAccounting Standards Board. This financial information has been adjusted toreflect the removal of the Excluded Assets that T&F Informa, as part of theAcquisition, is not buying. The divisional financial information is extractedfrom unaudited management accounts. The Circular that T&F Informa will send toits shareholders to request approval of the Acquisition will include anaccountant's report on the IIR financial information on the basis of T&FInforma's current accounting policies and IFRS and a reconciliation between theaudited accounts and the Excluded Assets. Following an independent review withIIR and its auditors, T&F Informa does not expect that there will be materialadjustments to the financial information in this announcement other than inrespect of net assets where there is expected to be a significant restatement byapproximately $15 million and in respect of an estimated $8m deduction fromEBITA in 2004 relating to the application of IFRS 2 (share-based payments) forstock options of one individual which are being satisfied as part of theAcquisition. During the period 1997 to 2000 IIR experienced rapid expansion in all of itsbusinesses as the global economy grew, leading to higher demand for conferences,availability of sponsorship and higher demand for customised performanceimprovement training. The aftermath of the terrorist attack in New York onSeptember 11, 2001 combined with both a slowing global economy and the SARSepidemic in Asia adversely impacted revenues between 2001 and 2003. The morerecent recovery in the global economy which has led to higher corporate spendand increased demand for corporate events has resulted in 2004 revenue growth of20.2% and EBITA growth of 105.3%. In 2004, IIR generated 51% of its revenues from North America, 17% fromContinental Europe, 17% from the UK, 9% from the Middle East and South Africaand 6% from the rest of the world. IIR has increased EBITA margins from 9.0% in 2003 to 15.3% in 2004 and is ahighly cash generative business converting approximately 100% of EBITA to cash. As at 31 December 2004, after adjusting for the Excluded Assets, IIR had netassets of $112 million (£58.4 million) including goodwill. As noted above, T&FInforma will restate this for IFRS and under its own accounting policies in itsCircular to shareholders and it is anticipated that net assets includinggoodwill will be significantly lower by approximately $15 million (£7.8million). Events (2004 revenues $278.0 million (£151.9 million), EBITA $44.3 million(£24.2 million)) IIR organises the following types of events: niche conferences covering topicalissues; annuals and forums which are medium to large industry conferences; salesled events with a primary focus on sponsorship and showcase revenue; large scaleevents which are positioned as major 'must attend' events serving an industry orsector and guru events promoting the expertise of thought-leaders. ' The strategy of the events business has been to move away from smallerconferences and focus on larger events that have higher repeat delegates,attract greater sponsorship and hence higher revenue predictability and growth.IIR's objective is for each of these larger events to become an industrystandard in their particular sector and hence that event for practitionersbecomes a 'must attend'. Large-scale events produced by IIR focus on the following industries; Finance,Telecoms, Life Sciences, Pharmaceutical and Information Technology utilisinghighly respected brands including: Super Return, Clinical Trials Congress, GAIM,Tetra, 3G Hong Kong and the Leaders conferences. Training seminar productsinclude: public courses for business executives in technical and professionaldevelopment subjects; and on-site courses for individual companies. In 2005,IIR is expected to produce over 1,400 conferences, 5,200 training events and 23industry leading exhibitions. Of these approximately 430 will be large scaleindustry events. In addition, IIR maintains high quality global marketingdatabases containing approximately 12 million names. The events business consists of 22 individual companies, which serve over 54industry sectors and operate in 30 countries. Principal business centres arelocated in the UK, the US, Germany, and Dubai. IIR's 23 industry-leading trade and consumer shows focus on the following keysectors; Electricity & Power, Printing, Luxury Yachts, Commercial Property andHealthcare. These demonstrate a high degree of visibility of revenues due toexhibition bookings in advance and strong exhibitor repeat rates. In 2006, IIR will stage the next IPEX event for the printing industry, which isheld every four years, and is believed to be one of the largerbusiness-to-business exhibitions in the UK. In addition, the business operatesMiddle East Electricity, Arab Health, the China, Audio and LightingManufacturers (CALM) Expo in Beijing and the PALME exhibition in Singapore. Performance Improvement division (PI) (2004 revenues $294.6 million (£161.0million), EBITA $43.5 million (£23.8 million) including a 5 month contributionfrom Robbins-Gioia) IIR is a leader in the fragmented performance improvement market. PI providesperformance analysis, diagnostics and customised training to corporates andgovernments. PI uses its specialist professionals to work with clients toidentify and resolve business and training issues and produce tailoredoperational programs. PI implements these bespoke programs frequently acrossentire workforces or departments through a variety of customised off-site,on-site and electronic products enabling a transformation of the skills of theemployees. Mentoring and monitoring, after the initial program delivery, areintegral parts of the overall contract and ensure key performance improvementobjectives have been met. The performance improvement market is highly fragmented and IIR has built aleading position over the last eight years and is one of the largest independentproviders of performance improvement services. Simba(5)(5) estimates that theUS outsourced skills training and e-learning market (excluding informationtechnology) was $5.1bn in 2004, having increased by 11% compared to 2003. Itestimates this market will grow at a compound average growth rate of 7.4% overthe period 2004 to 2008. PI operates under the following eight companies: • Robbins-Gioia: program, project and portfolio managementand consultancy • ESI: project and contract management and business analysis • AchieveGlobal: sales performance, customer service,leadership and teamwork training • Forum: leadership, customer service and sales performancetraining • Huthwaite: sales performance improvement • Omega Performance: credit, sales, customer service, contactcentres and wealth management for financial services • Communispond: business communications and presentationskills • PTI: technical and regulatory training for pharmaceuticalrelated companies. Revenues are generated through the sale of materials and product, contentlicensing, public and on-site training, course and material customisation,royalties and consulting services. Clients include approximately 60% of the Fortune 250, approximately half of theFortune 500 and a broad cross section of US Government departments. IIR's PIbusiness has strong brand names with a good market reputation based on its highquality intellectual property. IIR is positioned to expand its service offeringoverseas. PI has significantly strengthened its defensive qualities with the expansion ofits government client base. For example, ESI has grown its US Governmentrevenue contribution from 13% of sales in the year to 31 December 2000 to 27% inthe year to 31 December 2004. Robbins-Gioia generated 83% of its revenue fromthe government sector in the year to 31 December 2004. These relationships aregenerally embedded and long term in nature. There are expansion opportunitieswith other US Government departments and internationally. Background to and reasons for the Acquisition The Directors believe that the Acquisition represents a unique opportunity for T&F Informa to advance its strategy of developing its multi-format approach tothe provision of specialist content through publishing, events and now throughperformance improvement services. Through the combination of IIR's and T&FInforma's complementary events operations, the Acquisition will create a majorand highly attractive global events business. It will also provide an entryinto the high growth and resilient performance improvement market, giving scaleand excellence in an important information delivery area. T&F Informa believes that through IIR's existing PI business it can leverage itssector expertise, particularly in telecoms and pharmaceuticals, to cross-sellexisting products and drive growth in PI's own product offering. Theperformance improvement market is a new one for T&F Informa, but is highlycomplementary with T&F Informa's events, training and publishing activities. TheDirectors believe that the key characteristics of IIR's PI operations (includingwell respected brand names, varied and loyal customer base, strong cashconversion combined with high levels of repeatable and predictable revenues) arehighly attractive. IIR and T&F Informa's conference divisions have operated in the conference andtraining market for some thirty years. The two organisations' conferencebusinesses are operated with similar business models and management stylesthrough highly incentivised local management teams across a range of geographiesclosely supervised by senior management. T&F Informa is therefore well placed tounderstand the dynamics of running a large scale events business such as IIR andof managing the cultural and operational requirements of developing such abusiness effectively. In addition, IIR has a well-established managementstructure and a management team with an average tenure of 12 years that will addexperience and expertise to T&F Informa's existing events division managementbase. The Directors of T&F Informa are focussed on retaining IIR's keyemployees who they see as important to the continued success of the IIRbusiness. There is a compelling strategic and commercial logic for this acquisition: • Highly complementary events businesses T&F Informa and IIR have strengths in different sectors and geographies of theglobal conference market. The Enlarged Group will have increased scale in keymarkets such as the US, the UK, Dubai and Germany. In the UK, IIR is strong infinance, having events such as SuperReturn whereas T&F Informa is strong intelecoms and law with its 3GSM event and Legal IT Forum. In the US, IIR has asuccessful domestic conference business, an area in which T&F Informa's existingconference operation is relatively small. In addition, the Acquisition enablesT&F Informa to extend its reach with further growth into regions such as EasternEurope and Russia, China, the Middle East and Latin America. IIR hasincreasingly focused its business on developing large-scale events, while T&FInforma continues to focus on smaller conferences notwithstanding its largerevents such as its annual 3GSM event. • Entry into Performance Improvement market IIR offers T&F Informa an attractive opportunity to gain a leading performanceimprovement business and is a logical extension of T&F Informa's existinginformation delivery formats. The key attributes of PI are its long-termembedded relationships, partnership approach with its clients (generatingresilient, repeating revenue streams) and excellent proprietary and licensedintellectual property which are complementary with T&F Informa's existingbusinesses. In addition, there are likely to be significant opportunities touse T&F Informa's sector expertise by leveraging IIR's performance improvementskills into T&F Informa's top industry sectors. T&F Informa's access to expertsin specialist sectors should also provide PI with new client introductionopportunities. • Combined marketing strengths and customer files IIR provides an opportunity for T&F Informa to cross-promote and enhanceexisting market sector positions (for example, in financial services,pharmaceutical, biotech and telecoms). The Enlarged Group will be able toharness greater marketing strength by broadening its distribution and clientreach by leveraging IIR's customer database of 12 million names with its owndatabase of 10 million names. • Increased operational and financial scale and geographic reach The Enlarged Group will have enhanced financial strength, increased scale andgeographic reach to drive both organic and acquisition-led growth and to investand compete more effectively in its core and new markets. In particular, theEnlarged Group will generate an estimated 40% of its revenue in North America.A combination of the two groups' events businesses will significantly extend theEnlarged Group's strength further in other geographical jurisdictions, notablyRussia and Eastern Europe, Asia and the Middle East and Latin America. • Well balanced and robust portfolio The Acquisition will continue T&F Informa's strategy of having a well-balancedand robust portfolio of assets. Key to this is T&F Informa's ability todemonstrate attractive growth characteristics during periods of economic upturnthrough its operationally geared events businesses, while exhibiting profitresilience through its more defensive publishing and PI businesses in times ofeconomic slowdown. IIR offers this balance through its robust high repeatrevenues from 'must attend' events and long term relationships that it hasdeveloped in PI, whilst also having a scaleable model in strong economicmarkets. • New publishing opportunities There will be opportunities to extend T&F Informa's existing publicationsexpertise into IIR's performance improvement sectors where T&F Informa haseither no or a limited presence (this will include sectors such as sales,leadership and project and contract management). The merger of Informa andTaylor & Francis has demonstrated the strong benefits from combining apublishing driven business with an events business and generating revenues bycross-selling between these two delivery channels. T&F Informa has an excellent track record in acquiring and integratingbusinesses. T&F Informa intends to maintain IIR's brands, operating structureand full product range. The Directors of T&F Informa believe that the Acquisition will generateannualised efficiency savings of £8 million in 2006 and £11 million in 2007 fromareas including property, IT systems, procurement and central overhead savingswith expected one-off costs of £7.7 million occurring by the end of 2006. Financial effects of the Acquisition The Directors of T&F Informa believe the Acquisition will significantly enhanceT&F Informa's earnings per share (before goodwill amortisation and exceptionalitems) in the first full financial year after the Acquisition. This statementshould not be interpreted to mean that the future earnings per share of T&FInforma will necessarily match or exceed its historical published earnings pershare. The Board believes that the Acquisition will position the Enlarged Group wellfor good medium-term organic growth and for continuing high cash generation.The Board expects that the post-tax return on Acquisition will cover theCompany's estimated cost of capital in the first full year of ownership. On the basis of IIR and T&F Informa's actual 2004 revenues management estimatesthat a combination of the two groups from 1 January 2004 would have produced thefollowing balanced revenue split: 26% subscriptions, 33% events, 15% copy sales,22% performance improvement and 4% advertising. Through its organic developmentand future acquisitions, T&F Informa intends to continue to focus on building aportfolio which derives broadly half of its revenues from repeating revenuestreams and half from more operationally geared activities. This will enable itto capture more growth opportunities in its chosen vertical markets. The T&F Informa Board expects that, on the basis of the Rights Issue becomingunconditional, the ratio of net debt to earnings before interest, tax,depreciation, amortisation and exceptional items will be approximately 4.4 timesat completion of the Acquisition and expect that it will fall to around 4 timesby the year end. Details of the Acquisition The terms of the Acquisition Agreement are summarised in Appendix II of thisannouncement. Financing the Acquisition T&F Informa will use the net funds raised by the Rights Issue, expected to beapproximately £311 million, after expenses, to part finance the Acquisition. Thebalance will be provided from a New Facility of £1,250 million (existingfacilities will also be refinanced from this facility). In the unlikely eventthat the Rights Issue does not become unconditional, T&F Informa will financethe entire consideration for the Acquisition from the New Facility. The terms of the New Facility Agreement are summarised in Appendix II of thisannouncement. The Rights Issue is not conditional on completion of the Acquisition and theAcquisition is not conditional on the Rights Issue becoming unconditional. Inthe unlikely event that the Acquisition does not complete, the Board's currentintention is to use the proceeds to pay down the Company's existing debt whereappropriate and to continue to consider actively other acquisitionopportunities. If neither of these is appropriate it may also then consider apotential return of surplus capital to shareholders. Current trading The current year has started well and the Group is performing in line with itsexpectations. With the integration of Informa and Taylor & Francis now complete,the merger benefits are coming through as planned and T&F Informa is benefitingfrom the growth in a number of its key markets. T&F Informa has a well balanced portfolio combining complementary skill sets inpublishing and events that will allow it to continue to develop new productsaround its sector leading international brands. One year on from the Merger, T&FInforma is well placed to grow both organically and through selectiveacquisitions. IIR's first quarter trading has been strong. The directors believe that, taking account of the expected benefits of theAcquisition the Enlarged Group is well positioned for continuing growth andsuccess in the next current financial year and beyond. Principal Terms of the Rights Issue The Company proposes to raise approximately £311 million, net of expenses, byway of the Rights Issue. The Issue Price of 265 pence per New Ordinary Sharerepresents a discount of approximately 35% to the closing middle market price of407 pence per Ordinary Share on 31 May 2005 (being the last business day priorto the announcement of the Rights Issue). The Company proposes to offer up to 120,144,109 New Ordinary Shares, inaggregate, by way of rights, to Qualifying Shareholders at 265 pence per share,payable in full on acceptance on the basis of: 2 New Ordinary Shares for every 5 Ordinary Shares held by Qualifying Shareholders on the record date for the Rights Issue and soin proportion for any other Ordinary Shares then held, and otherwise on theterms and conditions to be set out in the Prospectus and, in the case ofQualifying non-CREST Shareholders only, the Provisional Allotment Letter. The New Ordinary Shares will, when issued and fully paid, rank equally in allrespects with the existing Ordinary Shares. Fractional entitlements to NewOrdinary Shares will be disregarded. Holdings of Ordinary Shares incertificated and uncertificated form will be treated as separate holdings forthe purpose of calculating entitlements under the Rights Issue. The Rights Issue is conditional, inter alia, upon the following: a) the passing of the Resolution to be proposed at the EGM; b) the Underwriting Agreement not having been terminated by Hoare Govett(pursuant to its rights to do so in certain circumstances) prior to satisfactionof the condition in sub-paragraph (c) below and otherwise becoming unconditionalin all respects; c) relevant approval and publication of the Prospectus and Admission havingbecome effective by not later than 8.00 am on 15 July 2005. The Rights Issue is not conditional on the Acquisition being completed. TheRights Issue has been fully underwritten by Hoare Govett save in respect of anynew ordinary shares which may be issued between today's date and the record datefor the Rights Issue. The full terms and conditions of the Rights Issue will be detailed in aProspectus, which is expected to be posted to Qualifying Shareholders (otherthan certain non-UK shareholders) in around two weeks time. Dividends T&F Informa intends to maintain its current dividend policy and adjust futureordinary dividend payments per share to take account of the bonus element of theRights Issue. Extraordinary General Meeting and Circular to Shareholders In view of its size, the Acquisition is conditional upon, inter alia, theapproval of the Acquisition by the Company's shareholders, obtaining competitionapprovals in Germany and the US and regulatory approvals in the United States.A Circular containing a notice convening the Extraordinary General Meeting willbe posted to shareholders in around two weeks time. The purpose of thisExtraordinary General Meeting is to seek approval of the ordinary resolution tofacilitate the Rights Issue and approve the Acquisition and other relatedmatters. The Circular to shareholders shall include, as required by the ProspectusDirective, a list of risk factors. This shall include general business risks,risks relating to the Enlarged Group and risks relating to the Acquisition. Other A presentation to analysts will be held at ABN AMRO, 250 Bishopsgate, LondonEC2M 4AA at 10:00 a.m. (London time) today. $ amounts have been translated at the appropriate average exchange rate or spotexchange rate for the relevant time period or date. All other $ amounts havebeen translated at a ratio of £1 : $ 1.823 Press Enquiries:T&F Informa +44 20 7017 5000 Hoare Govett +44 20 7678 8000Peter Rigby BrokerDavid Gilbertson Sara CoghillAnthony Foye Andrew Chapman Caroline GriffithsGreenhill +44 20 7440 0400 Financial Dynamics +44 20 7831 3113Financial adviser Press RelationsSimon Borrows Tim SprattPeter Bell Charles PalmerGregory Miller Greenhill & Co. International LLP, which is regulated in the United Kingdom bythe Financial Services Authority, is acting for T&F Informa plc and no one elsein connection with the Acquisition and will not be responsible to anyone otherthan T&F Informa plc for providing the protections afforded to clients ofGreenhill & Co. International LLP or for providing advice in relation to theAcquisition or the Rights Issue. Hoare Govett Limited, which is regulated in the United Kingdom by the FinancialServices Authority, is acting for T&F Informa plc as sole broker and underwriter(in connection with the Rights Issue) no one else in connection with theAcquisition and Rights Issue and will not be responsible to anyone other than T&F Informa plc for providing the protections afforded to clients of Hoare GovettLimited or for providing advice in relation to the Acquisition or the RightsIssue. The release, publication or distribution of this announcement in certainjurisdictions may be restricted by law and therefore persons in suchjurisdictions into which this announcement is released, published or distributedshould inform themselves about and observe such restrictions. THIS ANNOUNCEMENT DOES NOT CONSTITUTE, OR FORM PART OF, AN OFFER TO SELL OR THESOLICITATION OF AN OFFER TO SUBSCRIBE FOR OR BUY ANY SECURITIES, NOR THESOLICITATION OF ANY VOTE OR APPROVAL IN ANY JURISDICTION, NOR SHALL THERE BE ANYSALE, ISSUE OR TRANSFER OF THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT INANY JURISDICTION IN CONTRAVENTION OF APPLICABLE LAW. NOT FOR DISTRIBUTION OR TRANSMISSION, DIRECTLY OR INDIRECTLY, IN OR INTO THEUNITED STATES, CANADA, AUSTRALIA, THE REPUBLIC OR IRELAND OR THE REPUBLIC OFSOUTH AFRICA. Appendix I Definitions"ABN AMRO Bank" ABN AMRO Bank N.V."Acquisition" the proposed acquisition by the Company of the entire issued share capital of IIR"Acquisition Agreement" the agreement dated 31 May 2005 entered into by the Company and the current shareholders of IIR in relation to the Acquisition, details of which are contained in Appendix II of this announcement"Admission" admission of the New Shares, nil paid, to (i) the Official List of the UK Listing Authority and (ii) trading on the London Stock Exchange's market for listed securities becoming effective in accordance with, respectively, the Listing Rules and the Admission and Disclosure Standards"Admission and Disclosure Standards" the requirements contained in the publication "Admission and Disclosure Standards" dated April 2004 containing, amongst other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's market for listed securities"Circular" the circular to be issued to Shareholders in connection with the Acquisition and Rights Issue comprising a Prospectus and a Class One Circular"CRC Press" the publishing business of CRC Press"Directors" or "Board" the directors of the Company"EBITA" earnings before interest, tax and amortisation of goodwill"Enlarged Group" the Group as enlarged by the Acquisition"Events" the events business division of IIR"Excluded Assets" those assets and businesses of IIR which are excluded from the terms of the Acquisition"Extraordinary General Meeting" or " the extraordinary general meeting of the Company that will be heldEGM" to approve, inter alia, the Acquisition"Greenhill" Greenhill & Co. International, LLP"Group" or the "T&F Informa Group" the Company and its subsidiary undertakings or, where the context requires, some of them"Hoare Govett" Hoare Govett Limited"IFRS" International Financial Reporting Standards"IIR" or the "IIR Group" IIR Holdings Limited, a Bermuda exempted company including, where the context requires, some or all of its subsidiary undertakings"Informa " Informa Group plc, being the entity that was renamed T&F Informa plc upon completion of the Merger"Issue Price" 265 pence per New Share"Listing Rules" the listing rules made by the UK Listing Authority in accordance with section 74 of the Financial Services and Markets Act 2000"London Stock Exchange" London Stock Exchange PLC"Marcel Dekker" the publishing business of Marcel Dekker and its subsidiaries"Merger" the merger of Informa and Taylor & Francis effected by way of a scheme of arrangement pursuant to section 425 of the Companies Act 1985 and completed on 10 May 2004"MMS" MMS Group Holdings Limited"New Facility" the facility being made available to the Company, partly in connection with the Acquisition, details of which are contained in Appendix II of this announcement"New Facility Agreement" the agreement dated 31 May 2005 entered into by the Company and ABN AMRO Bank in relation to the New Facility"New Shares" or "New Ordinary Shares" the new ordinary shares of 10 pence each in the capital of the Company to be issued pursuant to the Rights Issue"Ordinary Shares" or "Shares" ordinary shares of 10 pence in the capital of the Company"PJB" PJB Publications Limited"PI" performance improvement and consulting"Prospectus" the Prospectus to be issued by the Company in connection with the Rights Issue"Prospectus Directive" Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC, of 4 November 2003"Provisional Allotment Letter" or "PAL the renounceable provisional allotment letter to be issued to" Qualifying non-CREST Shareholders (other than certain Overseas Shareholders)"Qualifying non-CREST Shareholders" Qualifying Shareholders holding Shares in certificated form"Qualifying Shareholders" Shareholders on the register of members of the Company at the Record Date"Rights Issue" means the offer by way of rights to Qualifying Shareholders to subscribe for New Shares, on the terms and conditions set out in the Circular and, in the case of Qualifying non-CREST Shareholders only, the Provisional Allotment Letter"Shareholders" the holders of Ordinary Shares"Taylor & Francis" Taylor & Francis Group plc, being the entity that merged with Informa, pursuant to the terms of the Merger"T&F Informa" or the "Company" T&F Informa plc and, where the context requires, all of its subsidiary undertakings"Underwriting Agreement" the conditional underwriting agreement dated 1 June 2005 entered into by the Company and Hoare Govett in connection with the Rights Issue"United Kingdom" or "UK" the United Kingdom of Great Britain and Northern Ireland"United States" or "US" the United States, its territories and possessions, any State of the United States and the District of Columbia, and all other areas subject to its jurisdiction Appendix IISummary of the Terms of the Acquisition Agreement and New Facility Agreement Acquisition Agreement The Acquisition Agreement is governed by the laws of the State of New York, USAand is conditional upon: (a) the applicable waiting period in respect of any notification underthe Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended) in the USAhaving expired or been terminated; (b) competition clearance in respect of the Transaction from the GermanFederal Cartel Office; (c) approval of the Acquisition by the Bermuda Monetary Authority; (d) approval from the US government to the acquisition ofRobbins-Gioia, Inc by T&F Informa (as part of the Acquisition); and (e) the passing of the Resolution to be proposed at the EGM. The purchase price payable by T&F Informa to the Sellers shall be US$1.4 billionin respect of: (a) the Acquisition; (b) repayment of certain indebtedness of IIR (together the "Preliminary Purchase Price"). The Preliminary Purchase Price is subject to an upward or downward adjustmentprior to Completion on a dollar for dollar basis in respect of working capital(the "Estimated Purchase Price") determined on the basis of a projected balancesheet and an assumed working capital requirement of US$5 million. The EstimatedPurchase Price is subject to a further adjustment (on a dollar for dollar basis)in respect of working capital, to be based on a final balance sheet to beprepared by the Buyer with 60 days following Completion (the "Purchase Price"). Completion of the Acquisition Agreement will take place on the first businessday following the satisfaction or waiver of all the conditions precedent. Lord Laidlaw has given T&F Informa certain warranties and indemnifications. OnCompletion, a retention of US$35 million from the Estimated Purchase Price (the"Retention Amount") shall be paid into a retention account to satisfy potentialclaims under such warranties and indemnifications. The aggregate liability ofLord Laidlaw for warranty claims has been limited to US$35 million (other thanin respect of tax claims, for which an uncapped tax indemnity has been given byhim). The balance (if any) of the Retention Amount shall be released on 30 June2006, after which non-tax claims may no longer be made. T&F Informa has given certain warranties and indemnifications to Lord Laidlaw,including in relation to its financing arrangements in respect of theAcquisition. T&F Informa has also agreed to indemnify the selling shareholdersagainst any personal liability to them arising from the operation of thebusiness following Completion. These obligations have been provided withoutlimitation in time or amount. Lord Laidlaw and Chris Maybury (the chief executive of IIR) will enter intonon-competition and non-solicitation covenants for a period of three and twoyears from the date of Completion respectively. New Facility Agreement New Facility Agreement New Facility Agreement Pursuant to the terms of the New Facility Agreement, ABN AMRO Bank (the "Bank")has agreed to make available to the Company (and its nominated subsidiaries,subject to the terms and conditions contained therein), multi-currency creditfacilities (the "Facilities") of up to £1,250 million for the purposes of (i)financing the Acquisition, (ii) the repayment of existing debt within the Groupor the IIR Group (if any) and (iii) general corporate purposes. The Facilitiesare split into three: "Facility A", "Facility B" and "Facility C". Facility A is a £550 million multi-currency term loan facility, which isavailable from the date of signing of the Acquisition Agreement (the "ExecutionDate") until 31 October 2004 and repayable in instalments until five years afterthe Execution Date. Facility B is a £400 million multi-currency revolvingcredit facility which is available for five years from the Execution Date. Allloans comprising Facility B must be repaid in full five years after theExecution Date. Facility C is a £300 million multi-currency bridge facility,which is available from the Execution Date to 31 October 2005 and is repayablein full 18 months from the Execution Date. Pursuant to the New Facility Agreement, the availability of each Facility issubject to the satisfaction of all conditions to funding (including conditionsprecedent, representations and warranties, covenants and events of default)usual for facilities of this nature but is subject to certain funds provisionsconsistent with terms applicable in connection with a UK public companytakeover. The Facilities will be secured by guarantees by certain subsidiariesof both the Company and IIR. The Bank is entitled to call for pledges overshares of material subsidiaries if Facility C remains outstanding 90 days afterCompletion and the Rights Issue has not been fully underwritten by Hoare Govettfor a certain amount. -------------------------- (3) Financial information regarding IIR has been extracted from the auditedconsolidated financial statements of IIR Holdings Limited and adjusted toreflect businesses and assets that will be transferred out of IIR prior tocompletion of the Acquisition Agreement. This financial information is subjectto further adjustment to present it on a basis consistent with T&F Informa'saccounting policies and International Financial Reporting Standards (IFRS). Itis not anticipated that other than as disclosed in this announcement theseadjustments will be material. A circular containing a prospectus will be postedto shareholders in due course which will include adjusted financial informationrelating to IIR. (4) This statement should not be interpreted to mean that the future earningsper share of T&F Informa will necessarily match or exceed its historicalpublished earnings per share. (5) Corporate Training Market 2005: Forecast & Analysis published by SimbaInformation, a Bowker Company This information is provided by RNS The company news service from the London Stock ExchangeENDRelated Shares:
Informa