Euromoney Institutional Investor acquires a majority stake in the Centre for Investor Education in Australia

Euromoney logoEuromoney Institutional Investor PLC, the international online information and events group has acquired  a 75% stake in the Centre for Investor Education (CIE).

Based in Melbourne, Australia, CIE was founded in 1997 and is a provider of investment forums for senior CIEexecutives of superannuation funds and global asset management firms.  Principal events include the Chief Investment Officers Symposium and the Major Market Players Symposium, both held annually in Australia, as well as the International Investing Symposium which was held in Tokyo earlier this month.  CIE was acquired in 2010 from its founder, Melda Donnelly, by Erling Sorensen and Jamie Nemtsas who have expanded its portfolio of events and will remain shareholders in CIE until December 2015.

The acquisition is expected to be earnings enhancing for Euromoney in financial year 2013. Euromoney has paid an initial A$14.4 million (£9.9 million) cash consideration for a 75% interest in CIE, to be adjusted up or down dependent on CIE’s results for the year to December 2013.  Euromoney will acquire the remaining 25% of CIE’s equity in two instalments based on CIE’s profits for the years to December 2014 and 2015.  The acquisition will be funded from Euromoney’s existing committed borrowing facility.  CIE recorded an unaudited pre-tax profit of A$1.5million (£1.0 million) on revenues of A$4.3 million (£2.9 million) for the year to December 2012.

“We are delighted to acquire CIE,” said Richard Ensor, Chairman of Euromoney.  “Euromoney expects to benefit from the rapid growth of Australia’s asset management industry.  This acquisition of the high-quality CIE business gives us the opportunity to consolidate further our position in this premium segment of the events market.  We look forward to working with Erling Sorensen and Jamie Nemtsas to develop CIE further.”

UK, London & Australia, Melbourne

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News Corporation to sell its stake in SKY New Zealand

newslimitedNews Corporation‘s News Limited subsidiary is going to divest its 44% stake in New Zealand’s largest subscription based broadcasting company SKY Network Television Limited.

News Limited has appointed Deutsche Bank to underwrite and, together with Craigs Investment Partners, tosky nz manage, the sales of its SKY shares. It is expected that the shares will be sold to a broad range of institutional and retail investors. Following the sales, News Limited will no longer have any holding in SKY Network Television Limited.

Chase Carey, President and Chief Operating Officer, News Corporation said: “SKY is a world class subscription television business and has been an outstanding investment for News Corporation. We and SKY have always enjoyed an excellent, arms-length working relationship and we expect this to continue unaffected by the sale. In particular, we do not anticipate any change to current arrangements regarding access to content and collaboration on technology.”

As a result of the sale, Michael Miller, Regional Director of News Limited, will resign from the board of SKY.

Australia, Sydney & New Zealand, Auckland

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Bglobal sells Utilisoft Australia to Hansen Corporation

bglobalSmart energy solutions and services business Bglobal plc has sold its Australian subsidiary, Utilisoft Pty Ltd (“Utilisoft Australia”), to Hansen Corporation Pty Ltd for a cash consideration of AUD$3.5 million (£2.36 million). Utilisoft Australia provides data management, software and process solutions to customers in the Australian energy market.  Hansen is an independent provider of billing, customer care and IT solutions to the telecommunications, electricity, gas and water industries.

In the year ending 31 March 2012, Utilisoft Australia achieved revenue of £2.38 million, operating profit of £0.36 million and profit before taxation of £0.39 million.  The net assets of Utilisoft Australia at 31 March 2012 were £0.40 million.

The sale of Utilisoft Australia will allow the Board to focus on its remaining UK operating businesses and continue to develop its “meter to cash” smart meter services platform.  During 2012, investment has been made in establishing Bsmart Energy Solutions, a company that is focused on delivering end to end energy services to the SME market and Nutech Training Limited, a company that provides dual fuel smart meter installation training. Both of these subsidiaries are now generating revenues for the Group. The cash proceeds of the sale will be used to invest in the further development of products and services, especially in the further development and testing of a PAYG integrated software solution for which the Group has received strong interest.

The Group now has a strengthened balance sheet, cash in the bank of approximately £3.4 million and the Board has confidence that further progress will be made during the current calendar year to capitalise on the opportunities that the Group is currently pursuing.

Tim Jackson-Smith, CEO, commented: “The sale of our Australian subsidiary strengthens the Group’s balance sheet and provides us with the resources to accelerate the development and field testing of our PAYG solution for which we have seen strong interest from existing energy suppliers and social and commercial landlords. I would like to thank all of the team at Utilisoft Pty for their commitment and hard work and look forward to seeing the business develop under its new owner.”

UK, Darwen, Lancashire & Australia, Bathurst NSW

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Pearson trading update – continuing tough market conditions

Pearson2Pearson has provided a January trading update. They will report preliminary results for 2012 on 25 February 2013.

See below:

In general, Pearson’s businesses continue to face tough market conditions and structural industry change which we see continuing into 2013. The company continues to gain share in key markets and to benefit from its investments in digital services and developing economies.

Market conditions remained weak, as expected, in the key fourth-quarter selling season for higher education, consumer publishing and corporate advertising. For 2012 as a whole we expect to report good revenue growth at constant exchange rates, operating profit of approximately £935m (broadly level at CER), adjusted earnings of approximately 84p per share and cash conversion of close to 90%. The 2012 results will reflect the absence of a profit contribution from FTSE International (£20m of operating profit and 2.2p of EPS in 2011) and the impact of the radically-changed trading environment for Pearson in Practice, which led to the recent decision to plan to exit that business.

Our North American education business will report modest revenue growth at constant exchange rates, indicating another year of significant market share gains in North America. 2012 was a particularly tough year for the US educational materials industry, with net sales for the combined US School and Higher Education publishing industries declining by 11% in the first 11 months of the year, according to the AAP. Our services and digital learning revenues continued to grow rapidly and we benefited from a strong performance from recent acquisitions and tight cost control.

Our International education business will report double digit sales growth at constant exchange rates as we continued to perform well in developing markets, assessment and English Language Teaching. School publishing markets remained generally subdued as a result of macroeconomic pressure and weak government funding in developed markets. Margins will be level with 2011 as we continue to invest to build scale, particularly in developing markets.

Our Professional education business will report operating profits significantly lower than in 2011. We have achieved good growth once again in professional testing but our UK adult training business, Pearson in Practice, faced a dramatic fall in demand with changes to the apprenticeships programme. We believe this business no longer has a sustainable model and therefore recently announced that we are planning for the exit or closure of Pearson in Practice. As previously announced, the cost of closure and impairment is expected to be approximately £120m and will be reported as a loss on disposal in Pearson’s 2012 statutory accounts.

The Financial Times Group will report good revenue growth for the full year, in spite of a slow fourth quarter caused by weaker advertising sales. Our digital and subscription-based revenues continued to grow well at both the FT and Mergermarket. The FT Group’s full-year profits will be significantly lower than in 2011, reflecting the absence of a contribution from FTSE International following its disposal and further actions to accelerate the shift from print to digital.

Penguin benefited from a good fourth-quarter publishing performance and traded in line with our expectations in its key selling season. It will report revenues in line with 2011 at constant exchange rates in spite of rapid industry change and tough conditions in the physical book retail market. Following Pearson and Bertelsmann’s announcement of their plans to combine Penguin with Random House, the two companies are seeking clearance for the proposed merger from appropriate regulatory authorities around the world. Though the timing of this process is inevitably uncertain, its completion will prompt significant restructuring as we demerge Penguin from Pearson and integrate it with Random House. We believe that the combined organisation will have a stronger platform and greater resources to invest in rich content, new digital publishing models and high-growth emerging markets.

For the full year, we expect our total interest charge to adjusted earnings to be approximately £50m (including a £12m pensions finance credit) and our effective tax rate to be around the low end of our guidance of 24-26% with our cash tax rate benefiting from the deferral of a tax payment into 2013.

Pearson generates approximately 60% of its sales in the US. The average £:$ exchange rate during 2012 was 1.59. The year end £:$ exchange rate was 1.63. A five cent move in the average £:$ exchange rate for the full year has an impact of approximately 1.4p on adjusted earnings per share.

UK, London

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WPP’s GroupM acquires majority stake in PLAY Communication

group m_0WPP‘s wholly owned operating company, GroupM, WPP’s global media investment management arm, has acquired a majority stake in PLAY Communication Pty Ltd, a leading experiential marketing agency based in Sydney, Australia.

Founded in 2002, PLAY offers activation, sponsorship, digital and branding services. The company employs around 23 people and clients include Optus, Volkswagen, Qantas, Coty, Tourism Queensland, Charles Darwin University, ASOS and others.

PLAY’s unaudited revenues for the financial year ended 30 June 2012 were approximately A$4.1 million, with gross assets at the same date of approximately A$2.8 million.

UK, London & Sydney, Australia

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Legal Wisdom in Technology Mergers and Acquisitions

Thomas Colmer3

GUEST FEATURE

It’s been said “lawyers are like rhinoceroses: thick skinned, short-sighted and always ready to charge”.

Avoid charging off into the wilderness or not seeing the wood for the trees.

Here’s an insider’s twelve point list of key pointers to make your life easier and get the outcome you deserve.

Focus on the Big Stuff

Start by using what time you have establishing: potential road blocks; workable alternative solutions; “nice but not critical” points; concessions; trade-offs; “red lines”; and “deal killers”. This helps you focus and avoid bear traps, even if more time is spent negotiating warranties and disclosure. “Follow the money”. Create options. Understand all obligations.

Front Load the Thinking

The earlier you get advice, the more use it will be. Like steering a tanker, your ability to influence the direction of a deal often reduces over time. Negotiating detailed term sheets at the outset can avoid expensive abort costs or the chances of being hijacked into unfavourable terms deep into a process (when bargaining positions may have changed) or worse.

Build on Sound Foundations

Obtaining the right sale price and terms requires early legal and tax involvement. Vendor due diligence can help identify and clean up issues. Pre-sale reorganisations may optimise risk mitigation. Deal structure often impacts upon liability and terms. Consider whether your counterparty has sufficient standing and whether a guarantee, earn out, staggered sale or escrow (holding back consideration) is appropriate.

Timing can be Everything

Time zone differences, remote completions and interrelated transactions present risks best addressed early and in writing. At each stage, “what happens if a bomb goes off?” Establish all internal or other requirements and conditions precedent early (e.g. competition/anti-trust approvals, change of control consents, credit committee sign off). Don’t underestimate the effects of “deal drag”. Budget for deals sucking up time, particularly with a business to run simultaneously.

Damn Due Diligence and Disclosure

Organising due diligence and disclosure materials (and rationally explaining issues, at the appropriate time) will reduce frustration, demonstrating credibility and professionalism and mitigating liability without “spooking” a buyer, particularly at the last minute. Electronic “virtual” data rooms with access control and audit trail are advisable. Scope your requirements to report effectively on due diligence so it is a useful tool rather than an expensive, out dated, paper-intensive disclaimer. Early sight of the size, content and order of a data room will help.

Think Before (and How) you Engage

Once past competitive tension of a beauty parade or auction, a prospective buyer looking “under the bonnet” of your business may not be as accommodating as in its initial flirtation. Carefully consider when and how to disclose (particularly sensitive) information (e.g. Intellectual Property, employees, customers). Data protection law and confidentiality considerations will be relevant. Conversely, a buyer should consider exclusivity (locking others out of the deal) and break fees (recouping a sum if the deal aborts). Make sure that unexpected legal obligations are not being incurred (e.g. financial promotions in teasers and information memoranda).

Be Organised and Prepared

Documents lists clarify requirements, assign responsibility and manage expectations. Splitting tasks can foster collaboration but decide “who holds the pen” on drafting documents in advance. Establish clear (realistic) deadlines (and the reasons for them), work-streams and a path to closure. Detailed issues lists and minutes of meetings reduce repetitive posturing and obfuscation of points. Be sure, however, that control of the agenda is not abused and accurately reflects your position.

Try Another’s Shoes

Consider sensitivity to cultural differences. Face saving may mean wasting time negotiating with people without the authority or influence to make decisions. Cutting to the chase (and cutting people out) can produce results but be wary of being bounced into meetings without representation. US buyers unfamiliar with The Code on Takeovers and Mergers in the UK need to be live to unexpected restrictions (e.g. market purchases, break fees, timing and disclosure of information).

Communication is Key

Establish your preferred means of communication and clear reporting lines to avoid “the tail wagging the dog”. Transaction process can drive terms or outcome, particularly when deal fatigue entrenches positions if left unconsidered. Consider meetings (with an agenda and chairman) instead of video-conferences and instant messenger on remote conference calls. Phone calls may achieve more than email overload. Try to control unnecessary iterations of documents or calls/meetings for their own sake. Track Changes facilitates collaborative drafting but ensure metadata is not inadvertently revealed and version control retained.

Choose the Right Law(yer)

Choice of governing law will be relevant to the selection of legal counsel but can affect the balance of power or provide arbitrage. Consider this separately from the location of a business or appropriate jurisdiction and procedure for disputes. Use deal excitement to explore real commercial drivers, objectives, timing, dynamics, personnel and sensitivities during sales pitches and test how attentive and hungry a lawyer is for your business. Honest, transparent and frank discussions on scope of work and imaginative fee proposals build mutual trust and pay dividends.

Are you Paying Attention?

Sell side lawyers often get appointed before the buy side, particularly when competitive tension is maximised. Key verbal and non-verbal deal information and nuance can be lost after initial stages. Similarly, initial interaction often sets the tone and terms. Adversarial counterparties may also easily spot and seek to exploit shortcomings.

Enjoy (All of) the Ride

Adviser relationships, feedback, patience and a sense of humo(u)r are essential. Make clear how much authority you give to your lawyer, let them know when you want them to take the lead and argue your corner. Lawyers are critical to getting an enjoyable deal done smoothly (or at all), what it looks like and, crucially, how it stands the test of time. In short, legal wisdom in Technology M&A can add value at each and every stage.

Want to know more? Please get in touch.

Thomas Colmer is a corporate finance lawyer at Osborne Clarke specialising in domestic and cross-border private and public mergers and acquisitions. You can contact him at:

T: + 44 20 7105 7276 logo-osborne-clarke.ashx
M: + 44 7887 691 541
E: thomas.colmer@osborneclarke.com
LinkedIn 
Osborne Clarke – about Thomas Colmer

© Copyright 2012. The author reserves all rights.

Penton Media acquires Farm Progress From Fairfax Media for $80M

Penton Media has acquired Farm Progress from Fairfax Media Limited of Sydney, Australia. The acquisition more than doubles Penton’s position in agriculture, which becomes the company’s largest sector group. The purchase price was $79.9 million before certain adjustments.

Farm Progress features four of the industry’s leading farm trade events, including America’s largest outdoor farm show, a broadcast division, and many well-established media brands. They join Penton Agriculture’s portfolio of market-leading franchises.

“Our investment is supported by several inarguable global economic trends including rising demand for nutrition, limited arable land and water, and strong export potential for agriculture products, capital equipment and related production technology into developing countries,” said Penton CEO David Kieselstein.

Farm Progress will become part of the Penton Agricultural Group reporting to Penton Senior Vice President, Dan Bagan. Jeff Lapin, president of Farm Progress, will leave the company at the end of the year. Farm Progress will remain headquartered in St. Charles, IL.

USA, New York, NY, & USA, St Charles, IL & Australia, Sydney

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Nine Entertainment Co. is to sell ACP Magazines Ltd to Bauer Media Group

Nine Entertainment Co. is to sell ACP Magazines Ltd to Bauer Media Group. The sale is expected to close in the next four to eight weeks. Terms of the deal were not disclosed.

ACP, which was established in 1933, is Australia and New Zealand’s largest magazine publisher, reaching over 15 million Australians each year. With leading magazine titles in almost every category, ACP’s major brands include The Australian Women’s Weekly, Woman’s Day, Cleo, Take 5, TV Week, Australian House & Garden, Gourmet Traveller and Zoo. ACP also operates a highly successful Trader and Custom business.

“The decision to sell the magazine business is not one we have made lightly. On balance however, the sale provides NEC with an attractive all cash valuation and ACP with the benefits of being part of a global publisher organisation. This sale will also allow us to focus on our core television and growing digital and events businesses.” said David Gyngell, Chief Executive Officer of NEC.

“We are delighted to welcome ACP as a member of the Bauer Media Group”, said publisher and owner Yvonne Bauer, “ACP fits our strategy of developing the Bauer Media Group globally, we believe in print, and ACP´s strong brands in Australia and New Zealand are perfect platforms to expand into digital areas.”

The impact of the sale on the operations of both NEC and ACP is expected to be minimal. Post completion, NEC and ACP will continue to work closely together in a number of areas including go to market strategies under the NEC operated “Powered” cross platform unit. Powered will continue to deliver ideas and insights utilising the breadth of media that the combined strength of NEC and ACP bring.

Matthew Stanton, CEO of ACP commented “Being part of the Bauer Media Group provides ACP with a positive and clear future, under an owner who is focussed on magazines and who will support investment and growth in our business. This outcome provides a commitment for the long term for both our brands and our people.”

About Nine Entertainment Co.Nine Entertainment Co. (NEC) is Australia’s most diversified media and entertainment group, a communication powerhouse delivering a world of media information and entertainment to millions of Australians. It’s assets include the Nine Network Australia, NBN Television, Australian News Channel, ACP Magazines, a 50% interest in Mi9, and entertainment entities, Ticketek and the Allphones Arena. Nine Entertainment Co. is owned by CVC Asia Pacific Limited.

Germany, Hamburg & Australia, Sydney & New Zealand, Auckland

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DMGT sells remaining interest in DMG Radio Australia

DMGT has sold its remaining 50% in DMG Radio Australia (DMGRA) to Illyria, the private investment vehicle of Mr Lachlan Murdoch, which first acquired a 50% interest in November 2009.

DMGT has received A$100m (£65 m) in cash and, later in the year, will receive a further sum equivalent to 50% of the final DMGRA dividend for the year ending 30 September, 2012. DMGT will use the proceeds of the sale to reduce debt.

Martin Morgan, Chief Executive of DMGT, said: “Our partnership with Illyria over three years has been a success. Following an approach from Illyria, we decided now was an appropriate time to realise the value created by DMGRA’s improved performance. The transaction represents another step forward for our strategy to concentrate resources on a more focused portfolio of businesses”.

UK, London & Australia, Sydney, Pyrmont

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First half 2012 mergers and acquisitions trend report for Private Equity in the Information Industry

Berkery Noyes has released its first half 2012 mergers and acquisitions trend report for Private Equity in the Information Industry.

The report analyses merger and acquisition activity in the private equity market for the first half of 2012 and compares it with activity in the four previous six-month periods. It features transactions made by financially sponsored acquirers within the Information Industry, including purchases made by subsidiaries or platforms of private equity firms.

Berkery Noyes’ data showed that total volume increased two percent. Vista Equity Partners and Hellman & Friedman each had seven Information Industry transactions in first half 2012, making them the most acquisitive private equity firms by volume. Total value decreased eight percent, from $18.90 billion to $17.33 billion.

M&A activity in the Health and Pharmaceutics segment rose 62 percent and reemerged as the largest vertical market segment tracked in this report. One of the most active related buyers was TPG Capital, which acquired iMDsoft, DecisionView, and PharmARC Analytic Solutions. Lifestyle and Entertainment, previously the largest market segment, leveled off by 21 percent in first half 2012. This came in the aftermath of a 46 percent improvement in second half 2011.

Private equity M&A within the Software portion of the Information Industry remained flat throughout 2011 but increased 15 percent during the last six months. Three of the top ten overall Software deals in first half 2012 were backed by private equity firms. This consisted of Turaz’s announced merger with Misys for $2 billion, Apax Partners and JMI Equity’s announced acquisition of Paradigm for $1 billion, and GTCR’s announced acquisition of CAMP Systems International for $675 million. These deals together accounted for 21 percent of financially sponsored transaction value in the Information Industry.

“Large private equity firms keen on making acquisitions are likely to continue pursuing deal opportunities in the middle and lower middle market,” stated John Shea, Managing Partner at Berkery Noyes. “There are several factors contributing to this. First, they are finding that it currently takes longer in some instances to sell their portfolio companies, which can temporarily limit the amount of capital they have available to invest elsewhere. Second, they are facing heightened competition from strategic buyers, as was demonstrated by the bidding process for Quest Software between Insight Venture Partners and Dell.”

A copy of the FIRST HALF 2012 M&A REPORT FOR PRIVATE EQUITY IN THE INFORMATION INDUSTRY is available at the Berkery Noyes website – here.

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