mergermarket Q3 Monthly M&A Insider report

November 2, 2011 — Fusion DigiNet

According to the mergermarket Q3 Monthly M&A Insider report (October 2011), global m&a in the first three quarters of 2011 totalled us$1,718bn – a 21.5% increase from the us$1,414.4bn worth of deals registered in the first three quarters of 2010 – and the financial services sector saw an even steeper 37.4% increase during this nine-month window. The first three quarters of 2011 brought us$208.5bn in financial services deals to market, up from us$151.7bn in the same period last year,

Sectors covered by Fusion DigiNet

The largest sector by market share was Energy, Mining and Utilities at 23.1% (835 deals) down 10% (-125 by volume), in 7th place is Business Services at 4.4% (1,159 deals) -17% (+62 by volume), media is in 8th place at 1.9% (279 deals) +23% (no change by volume).

See the full report at mergermarket

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PennWell Acquires LED Lighting Event – The LED Show

October 26, 2011 — Fusion DigiNet

PennWell Corporation, a diversified global media and information company, announced today that it has acquired the assets of The LED Show, a conference and exhibition serving the lighting design and technology segment of the LED industry.

Launched in 2009 by lighting designer and founder James Highgate, The LED Show is held annually in Las Vegas, Nevada and attracts leading LED manufacturers displaying the latest technology and products.  The LED Show was last held in July 2011 for architects, electrical engineers, home builders, hotel engineers and designers, with 87 exhibitors and an attendance of more than 3,000 from the U.S., Canada, Mexico, Spain, Italy, Korea, Japan, China, England, The Netherlands and Greece.  The 2012 LED Show will take place July 30-August 1, 2012, again in Las Vegas, and Highgate will continue as a consultant to PennWell.

The LED Show is PennWell’s third acquisition in the LED and lighting industry and will be part of its LEDs & Lighting Media Group which includes the Strategies in Light conferences and exhibitions held annually in the U.S., Europe, Japan and China; the Strategies Unlimited research company focused on photonics, LEDs and lighting; and LEDs Magazine, the leading magazine and website for the global LED industry. PennWell will manage the business from its Technology Group offices in Nashua, New Hampshire under the direction of Christine Shaw, Senior Vice President and Group Publisher, LEDs & Lighting Media Group.

PennWell President and CEO Robert F. Biolchini said, “The acquisition of The LED Show expands our presence in the fastest growing segment of the LED industry, as advances in lighting technology and design are expected to proliferate over the next decade.  We look forward to marrying PennWell’s conference and exhibition capabilities with James Highgate’s deep knowledge of the manufacturers and lighting specialists that will ensure the continued growth of this event.  With the addition of The LED Show to our portfolio, PennWell has achieved a dominant position serving the full spectrum of the LED industry.”

USA, Tulsa, OK

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Report: Quarterly analysis of UK-headquartered private equity control deals in the £10 million to £100 million segment

October 5, 2011 — Fusion DigiNet

  The volume and value of deals completed during the first nine months of 2011 in the lower mid- market investment space has increased year on year for the past three years, according to research from Lyceum Capital and Cass Business School.

For more information, visit the Lyceum Dashboard

Data from The UK Growth Buyout Dashboard – a quarterly analysis of UK-headquartered private equity control deals in the £10 million to £100 million segment – shows that 63 transactions completed between 1 January 2011 and 30 September 2011. This compares to 50 investments for the same period of 2010 and just 25 during the first nine months of 2009.

During Q3 2011, deal volume has built on an encouraging first six months of 2011 with a greater number of deals completed than in Q2. The combined value of those deals fell slightly (from £794 million to £785 million) but both volume and value of deals was still higher than the same quarter of 2010.

Q3 deal value being lower than Q2 despite five more transactions, indicates that there are fewer large deal opportunities however the lower mid-market continues to replenish itself as new businesses enter the space looking to grow with private equity investment.

Transaction sizes

The combined deal value of £785 million exceeds the £698 million recorded during Q3 2010 and the £220 million of Q3 2009.

The highest transaction value recorded in the last three months was £87.8 million, compared to a high of £100 million in Q2 H1 2010.

Meanwhile, transactions valued between £50 million and £100 million fell from seven in Q2 to five in Q3. The majority of the 22 lower mid-market deals completed were in the £26 million – £50 million range, with 86 per cent under £50 million.

The increase in deal activity indicates that there is a growing appetite for investment and that transactions should continue to rise unless there is a significant reversal in the state of the wider economy. There may not currently be the appetite for the larger end deals in the mid-market space but as long as volume maintains its upward trend, the necessary deal flow which keeps the market moving does exist.

Transaction types

Management buyouts (MBOs) and secondary buyouts (SBOs) remained the most prevalent transaction types for private equity investors, but the number of MBOs completed in Q3 2011 actually fell to nine from 12 in Q3 2010 – lower than each of the previous six quarters back to Q1 2010.

There were also two public to private delistings during Q3, compared to one in each of the previous two quarters.

No Initial Public Offerings (IPOs) were recorded, a trend which stretches back to Q1 of 2010 and is unsurprising in a financial climate of weak capital markets where so many anticipated floats have been shelved.

Trade, IPO and secondary exits

A total of nine secondary buy-outs (SBOs) characterised the quarter – the highest number of any quarter during the last two years and an indication that private equity firms are now beginning to sell assets that they have held onto throughout the depths of the economic downturn.

There were six exits to trade, higher than the previous two quarters but lower than the eight which took place in Q3 2010.

Investments by industry

Technology, media, telecommunications (TMT) businesses continue to dominate the lower mid- market with eight out of 22 deals this quarter (38 per cent) and five transactions in business support services.

Retail – undoubtedly one of the sectors hardest hit by a dip in consumer spending – continues an encouraging run of three deals or more completing in every quarter since Q2 2010.

Commentary

Andrew Aylwin, Partner at Lyceum Capital, said: “In the £10m to £100m value range, UK private equity deal volumes continue to recover. With 63 completed transactions so far for the 9 months to 30th September, the market is trending back to historical norms of 100+ control deals a year. The UK lower mid-market segment remains a plentiful source of high quality opportunities across a range of sectors and private equity firms such as Lyceum Capital continue to play a key role in supporting dynamic companies that need capital to continue their successful development and drive the recovery of UK plc.”

Professor Scott Moeller at Cass Business School commented further: “This performance of the UK lower- mid market in the third quarter is in distinct contrast to the overall market when much larger deals of £100 million plus are considered. That market has declined during the past two quarters and some reports show it declining dramatically in Q3 – Bloomberg, for example, this week reported a 43 per cent decline in deals with European purchasers for the overall market. Therefore, the volume of deals in the lower mid market is encouraging in this difficult economic environment, and may prove in the next quarter to continue to be resilient. There is further evidence in our figures of a positive shift in the market with a strong mix of industries, including healthcare, which was absent last quarter and a resurgence in technology deals.”

Other Research Reports:

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Postmedia Network acquires Sprouter

October 4, 2011 — Fusion DigiNet

Canadian newspaper publisher Postmedia Network has acquired Sprouter, an Internet content company that specialises in the areas of technology, digital media, entrepreneurship and startups. Through the acquisition, Sprouter becomes a division of Postmedia Network. Sprouter will continue to operate under the Sprouter name and branding under the leadership of Sarah Prevette.

“We are thrilled to welcome Sprouter to the Postmedia Network family,” said Paul Godfrey, President and CEO. “Sprouter complements our Digital First strategy and brings a spark of digital entrepreneurship to our family of brands.”

Founded in 2009 by Sarah Prevette, Sprouter enables entrepreneurs to ask a question, browse relevant content, comment on answers, and share advice with their networks. Sprouter also produces the Sprouter Weekly entrepreneurship publication, and hosts Sprout Up events.

Canada, Toronto

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DMGT sells GLM to Providence Equity Partners

October 4, 2011 — Fusion DigiNet

DMGT has sold George Little Management (GLM) to Providence Equity Partners. Providence is acquiring GLM through a new holding company led by Charles G. McCurdy, who most recently served as Chief Executive Officer of Canon Communications, a leading producer of trade shows, publications, and digital and data services.

The total consideration was US$173 million(£111 million) of which $154 million (£99 million) was cash with the balance being an interest-bearing note. In addition, DMGT benefit from selling the business with negative $7 million (£4 million) in working capital.

GLM was founded by George F. Little, in 1924, and acquired by dmgt in 2007, and is part of the dmg:events portfolio. The company is forecast to turnover $71 million and make $26 million of pre-tax profits. GLM employs some 100 people, with offices in White Plains, NY, Atlanta, GA and Naples, FL.

GLM currently produces 15 tradeshows. Alltogether, these events have around 11,000 exhibitors in 1.8 million net square feet of exhibit space, and attract approximately 345,000 attendees.

USA, Providence, RI & White Plains, NY & UK, London

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DMGT trading update September 2011

September 28, 2011 — Fusion DigiNet


DMGT trading update to September 2011

Year end is October 2, 2011

The trading update covers the eleven month period to the end of August 2011

Summary

Revenue up 1% on last year, up 2% on an underlying basis

B2B businesses revenues up 9%

Consumer businesses revenues down 3% on an underlying basis

Forecast for the year at the lower end of the range of market expectations~

BUSINESS TO BUSINESS

Revenues from the group’s B2B operations for the period were 8% higher than for the corresponding period last year, with an underlying increase of 9%.

At a divisional level, Risk Management Solutions’ revenues grew by 4%, an underlying increase of 11%, reflecting continued growth from RMS’s core modelling business.

At dmg information, reported revenues grew by 1%. The underlying revenue increase was 5% with good growth from our companies in the property, education and energy information markets.

At dmg events, reported revenues grew by 20% including the impact of this year’s additional biennial show. The underlying revenue increase was 14%. This includes dmg event’s largest recent event, the summer New York International Gift Fair in August, part of GLM, the sale of which is expected to complete in late September.

B2B revenues include those of Euromoney Institutional Investor, which released its trading update on 23rd September, reporting that total revenues for the full year are expected to show a headline increase of approximately 10%. Recent trading has shown a slowing in the rate of growth of advertising and event sponsorship sales. In contrast, delegate bookings for events and training courses have held up well, and subscriptions revenues have continued to grow at similar rates to the third quarter.

Euromoney has reported that it may achieve the profit target under its capital appreciation plan (CAP 2010) a year earlier than expected. This would give rise to an additional accelerated long-term incentive expense of £6.6 million under IFRS2 which is not reflected in the current estimates for the full year result.

CONSUMER MEDIA

Underlying revenues from A&N Media were 3% lower than for the corresponding period last year and 4% lower on a reported basis. A&N Media has continued to focus on operational efficiency. However, weaker advertising revenues, combined with the high cost of newsprint, will lead to significantly lower profits for the full year compared to last year.

Planning consent has recently been granted for the construction of Harmsworth Printing’s new printing plant in Thurrock. The group plans to acquire the freehold of the site and for the first press to begin production in autumn 2012 and for all six presses, relocated from the existing Surrey Quays site, to be fully operational by the autumn of 2013.

Associated Newspapers’ underlying revenues for the period were 1% lower than for the corresponding period last year, and 2% lower on a reported basis. Underlying circulation revenues were 3% lower. Both the Daily Mail and The Mail on Sunday have continued to improve their market share in recent months.

Total underlying advertising revenues for the period were down 1%, with those from Associated’s newspaper operations down by 2% with print down 4% and digital up 54%. The two largest advertising categories, retail and travel, were weak in the period, both down 5%. The revenues of Associated’s digital-only businesses grew by 5%.

For the eleven weeks to 18 September 2011, total underlying advertising revenues were 1% below last year, with newspaper operations down 2% and digital-only businesses up 2%. This was a significant improvement on the previous quarter to June, which was down 7%, driven mainly by Metro’s particularly strong performance and improving trends from the Daily Mail. Underlying circulation revenues were 4% lower, due to the recent temporary price discounting at The Mail on Sunday, partly offset by the impact of the increase in the cover price of the Daily Mail weekday editions on 18th July 2011.

Northcliffe Media’s total revenues for the period were 10% lower with advertising revenues down 10% (recruitment down 30%, other categories 6% lower) and circulation revenues down 7% compared to last year. For the eleven weeks to 18 September, advertising revenues are down 11%, broadly in line with the previous quarter (down 10%).

Costs continue to be well below prior year levels, driven by reduced staff and distribution expenditure in particular. Headcount was reduced by 17% over the period from 3,130 to 2,600.

FINANCING

On 1 August, Euromoney announced the completion of its acquisition of an 85% interest in Ned Davis Research group for approximately US$108 million (£66 million). The group also expects to complete the sale of GLM before the year end, for a total consideration of £110 million, including £93 million in cash. It has sold its equity investment in CoStar group, Inc, acquired in exchange for Property & Portfolio Research in July 2009, for US$35 million (£22 million). Combined with the generation of strong cash flows, we expect net debt at the year end to be below £750 million.

In May, the group reported a deficit on its defined benefit pension schemes of £198 million at the half year (calculated in accordance with IAS 19). Should the recent declines in bond yields and falls in the equity market be sustained, the group’s year end accounting pension deficit is likely to rise by in excess of 50%.

Martin Morgan, Chief Executive, said:

“DMGT has delivered a solid revenue performance over the year to date, driven by continued strength in our B2B operations offset by difficult market conditions for our consumer businesses. Despite our continued focus on operational efficiency, the weak consumer advertising environment means that full year group operating profit will be lower than last year. We expect some growth in earnings per share compared to last year, given lower finance and tax costs, but at the lower end of market expectations. Going forward our focus will remain on driving organic growth, operational and financial efficiency and pursuing an active portfolio management approach.”

UK, London

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Wilmington Group – Full Year Results

September 20, 2011 — Fusion DigiNet

Wilmington Group plc provides information and training to professional business markets globally. It operates in a variety of professional markets including accountancy, banking and finance, charities, healthcare, insurance, legal and pensions. Capitalised at approximately £71 million, Wilmington floated on the London Stock Exchange in 1995.

  • Charles Brady, Chief Executive
  • Basil Brookes, Finance Director

Full Year Results for Year Ending June 2011

Highlights

  • Revenue – increased by 6.9% to £83.8m (2010: £78.4m)
  • Adjusted Profit Before Tax – increased by 2.2% to £13.4m (2010: £13.1m)
  • Adjusted EBITA increased by 3.5% to £14.9m (2010: £14.4m)
  • Statutory profit before tax £6.1m (2010: £7.3m)
  • Adjusted Earnings per Share – increased by 11.3% to 11.8p (2010: 10.6p)
  • Cash inflow from operations £15.8m – (2010: £15.5m)
  • Cash conversion 111% (2010:110%)
  • Adjusted Operating Margin – decreased to 17.8% (2010: 18.4%)

Proposed final dividend of 3.5 pence per share, making a full year maintained dividend of 7.0 pence per share

Returns from acquisitions

  • ROI 17% 2011 (2010: 14.8%)

Publishing & Information

  • Revenue increased 13.4% to £40.2m
  • Underlying revenue, before acquisitions, stable at £35.3m
  • Digital revenues 72% of sales (2010: 66%) Aim to be 78% in 2011/12

Training & Events

  • Revenue increased 1.0% to £43.6m
  • Excluding investment spend profits increased by 9.8% to £7.2m

Training and events businesses performed well, save for legal training where market conditions continue to be challenging; excellent performances by Mercia in the accountancy market and Matchett in the investment banking market

Overseas expansion continues: 26% (2010: 21%) of Group revenues were generated outside the UK, with offices in Sydney, Hong Kong, Singapore, Dubai, Dublin, Paris, New York and Chicago

David Summers, Chairman, commented, “The Group has shown resilience during the recent economic downturn, transitioning its activities to sustainable professional business markets and operating increasingly internationally. The Group has continued to invest in exciting new developments in subscription based digital publishing and professional training. We are also investing in the development of the International Compliance Training business to meet the significant demand for anti-money laundering and compliance training programmes. The current level of development activity is unprecedented in the history of the Group and I believe that these investments will deliver strong levels of growth in the medium term. While generally the economic environment continues to be very tough, with few signs of sustained improvement in the global economy, Wilmington’s business is robust. I anticipate that it will continue to deliver good levels of profitability and, once markets recover and the returns on our many exciting developments are realised, I believe it will deliver excellent returns for its shareholders.”

UK, London

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Centaur Media acquires Investment Platforms for up to £6.3M

September 6, 2011 — Fusion DigiNet

Business information and events group Centaur Media plc has acquired Investment Platforms, a specialist information business in the retail financial services sector. The purchase price is £1.8m, payable in cash at completion, and a further payment in cash subject to IPL’s profits in the year to 30 June 2014. The total purchase price will be capped at £6.3m.

IPL provides research data, analysis and advice on the subject of retail financial distribution and fund platforms, with a particular focus on financial wraps, or platforms that typically offer access to a range of asset types. It also organises events for product providers and intermediaries. The investment wrap and platform market has become one of the driving forces of the retail financial services industry in the past 10 years.

IPL was founded three years ago by vendor, Holly Mackay, who had previously developed and managed investment platforms for Merrill Lynch and Norwich Union in Australia before being appointed UK Director of Santander’s Allfunds Bank in 2005. IPL has quickly established itself as the leading source of information on this fast-growing specialist area and on retail investment distribution in general.Holly and her staff will remain with the business following the acquisition,

IPL’s revenues are currently generated principally through subscriptions to research reports, and from sponsorship and delegate revenues derived from events. Pro forma 2011 revenues and earnings before interest and tax (ebit) are £0.9m and £0.3m, respectively.  The value of gross assets of IPL at completion amounted to approximately £0.4m. The acquisition is expected to be immediately earnings enhancing.

Geoff Wilmot, CEO of Centaur, said:

“This earnings enhancing acquisition is an excellent fit with us. IPL provides specialist information and advice to the retail funds and intermediary community, which is a core market for Centaur, served by our leading brands Money Marketing and Fund Strategy.

“This market is in a period of significant change following the completion of the Retail Distribution Review and IPL is the leading expert information provider in the field.  Given our strong position in this market, we are ideally placed to provide IPL with full market distribution of its services. ”

UK, London

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A Fusion Deal: Carson Systems sold to Wellesley Information Services

August 3, 2011 — Fusion DigiNet

carsonifiedFusion Corporate Partners are pleased to announce our latest deal: the sale of Carson Systems Ltd a UK-based producer of industry-leading events for Web developers, designers, and entrepreneurs, to US-based Wellesley Information Services (WIS). Terms of the deal were not disclosed.

Carson Systems produces events for web professionals and entrepreneurs. The company’s Future of Web Applications (FOWA), Future of Web Design (FOWD), and Future of Mobileity (FOM) series of events are annual gatherings of thought leaders, technologists, and investors. They have featured renowned speakers including Zappos.com CEO Tony Hsieh, O’Reilly Media founder Tim O’Reilly, Facebook founder Mark Zuckerberg, and Digg founder Kevin Rose.

Carson Systems has been particularly effective using social networks and other information delivery mechanisms to build a community of developers, designers, and futurists who are passionate about technology and leveraging it to make a significant impact on business and society.

“Both WIS and Carson Systems have unique competencies within their respective core market spaces. We are confident that, through this acquisition, each organization can learn from the other’s expertise — and together we will be much better positioned to offer unmatched value and exciting new products for our customers,” said Benny DiCecca, CEO of WIS.

WIS is a portfolio company of UCG and a provider of SAP and IBM training and education. WIS serves more than 250,000 customers in over 100 countries, and offers a diverse set of resources including print journals, magazines, electronic knowledge bases, online communities, conferences, seminars, and books. This is WIS’s first acquisition in the UK and will position WIS to serve a brand new market space.

“Web and mobile application development represents technology’s future. Carson Systems has consistently been at the epicenter of this technological revolution, offering education and training to an exciting breed of entrepreneurial web developers and designers. The opportunities in this market are immense, and we are excited to bring WIS’s deep knowledge of the conference, publication, online education, and custom training business to help capitalize on them,” said DiCecca.

Mark Eisenstadt Partner at Fusion said, “Ryan Carson is passionate about bringing the latest and best practice to the web community. We were delighted to have the opportunity to work with Ryan and his team. Carson Systems is a high quality business and tailor-made for WIS. I am sure that WIS’s expertise as a leading provider of technology education combined with Carson’s ability to attract leading edge players in the technology market will ensure the business accelerates it’s growth to cater for this expanding marketplace’’

Fusion acted exclusively for the shareholders of Carson Systems Ltd. Mark Eisenstadt (meisenstadt@fusioncorp.co.uk) led the Fusion team and was supported by Paul Kelly (pkelly@fusioncorp.co.uk). Mogers Solicitors, headed by Tom Webb, provided legal advice to the vendors.

UK, Bath & USA, Dedham, MA

Other Fusion Deals:

Media and Information

Energy Services
Events, Broadcast and Other deals
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Kaplan acquires e-learning provider Structuralia

August 2, 2011 — Fusion DigiNet

Training and education provider Kaplan, has acquired Madrid-based Structuralia, the e-learning provider for the engineering and infrastructure sector in Spain. Terms of the deal were not disclosed.

Structuralia provides training to more than 85,000 staff employed at more than 1,350 companies.  Major clients include ACS, Ferrovial (operator of Indiana Toll Road and BAA-Heathrow Airport), Sacyr (builder of the new extension of the Panama Canal), OHL (designer, builder, financer and operator of University of Montreal Hospital; builder of New York Subway), and energy companies such as ENDESA, IBERDROLA and REE.

In partnership with five Spanish universities, Structuralia also offers 16 Master’s degree programs and 11 Executive Programs including an MBA for engineering professionals, and will be launching two further programs in the autumn.  University partners are: the University of Comillas (ICAI and ICADE Business School), the Polytechnical University of Madrid, and the Polytechnical University of Catalonia.
In Europe, Kaplan provides training towards professional qualifications and business programs, higher education programs and English language courses.

“Significant changes in the infrastructure industry through advances in technology and the new models of financing created by Public-Private Partnerships (PPP) are generating a growing demand for further education for engineers and skilled tradesmen,” said Jose Wehnes, CEO of Kaplan Europe.  “We look forward to meeting that demand in Spain and beyond by developing Structuralia’s impressive learning solutions.

“Their focus on personal, portable and flexible training is closely aligned with Kaplan’s work on innovation in delivering high quality education and training to students whenever and wherever it best suits them.”

Juan José Gálligo, CEO of Structuralia since the founding of Structuralia ten years ago, who will continue in the company as CEO, said: “In 2001, a group of construction companies and engineers with a shared vision started Structuralia, and it has since enjoyed solid growth, strong margins and has built an enviable list of clients.  It was important to find a strategic buyer that could take us to the next stage in our growth.  With Kaplan’s 70 year history in providing education and training, and their global reach, we believe this is an excellent fit for developing our offering both in Spain and internationally.”

UK, London & Spain, Madrid

 

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