Informa eyes German rival

INFORMA, the trade magazine publisher and events organiser, yesterday confirmed it was eyeing a takeover bid for German rival Springer Science and Business Media.<br /><br />Shares in Informa, which publishes the world&rsquo;s oldest newspaper Lloyd&rsquo;s List, tumbled on the news that it was interested in acquiring debt-laden Springer, owned by private equity firms Candover and Cinven.<br /><br />The private equity owners have been looking for a buyer for Springer at a possible price tag of about &pound;500m, down from an initial asking price of &pound;1bn.<br /><br />Informa said: &ldquo;Combining Springer and Informa would bring together two highly-respected and profitable academic publishers that would be positioned to take advantage of the opportunities in their core fields of Scientific, Technical and Medical, and Humanities and Social Sciences, respectively.<br /><br />&ldquo;The combination would be expected to generate significant synergy benefits from rationalisation of the combined cost base plus improved marketing and operating efficiencies.&rdquo;<br /><br />Investors balked at the logic of a combined company and worried Informa would overstretch itself to complete the merger. Shares in Informa dived nearly nine per cent yesterday to close at 285p.<br /><br />Informa, which raised &pound;242m in fresh capital in May, is likely to tap investors for another &pound;1bn-&pound;1.5bn to finance any deal.<br /><br />Informa&rsquo;s move on Springer is a role reversal, as Informa in 2006 rejected a &pound;2.7bn takeover bid by Springer.<br /><br />The aim was to make the biggest publishing house in Europe worth an estimated &pound;4bn.<br /><br />That bid fell through but sparked a rash of merger activity in the sector since, including the takeover of VNU, owner of ACNielsen.<br /><br /><strong>SHOULD INFORMA TABLE A BID FOR SPRINGER?</strong><br /><br /><strong>GARETH DAVIES</strong> INVESTEC<br /><br />"A deal would make strategic sense by combining two strong academic publishing businesses. At a potentially attractive price, we think this is a deal Informa management have to consider."<br /><br /><strong>ALEX DEGROOTE</strong> PANMURE GORDON<br /><br />"The market's first reaction is trepidation. Any such offer would be accompanied with another equity fund raising, soon after the rights issue. There are obvious synergy opportunities here."<br /><br /><strong>MANOJ LADWA</strong> ETX CAPITAL<br /><br />"Informa&rsquo;s bid for Springer Science may well provide long-term growth and value to shareholders, but in the near-term the market is not convinced. Springer&rsquo;s debts match Informa&rsquo;s value."<br />