(Adds details, CEO and analyst comments, share movement)
By Noor Zainab Hussain
Dec 13 Event organiser UBM Plc said it
would buy Asian exhibitions company Allworld for $485 million in
cash, strengthening its position in Asia and providing an entry
into the Middle East.
The deal, which will be funded with a new $365 million
bridge facility and by part of the proceeds from UBM's sale of
PR Newswire, is expected to add to 2017 earnings.
The cash consideration, which values Allworld on a debt and
cash free basis, looked like a "very high price," Investec
analysts wrote in a client note.
Allworld, which operates tradeshows in 11 countries, posted
revenue of $97.2 million in the 12 months ended June 30.
The company complements UBM's existing portfolio in food and
hospitality, and packaging and manufacturing, while allowing UBM
to enter the oil and gas market.
"Oil and gas is probably nearer the bottom of the cycle than
the top, so it's a good time to be entering oil and gas," UBM
Chief Executive Tim Cobbold told Reuters.
Oil closed at $55.7 a barrel on Monday, down from highs of
about $100 a barrel in June 2014.
N+1 Singer analyst Johnathan Barrett said major exhibition
operators had switched their acquisition focus from emerging
markets to the United States.
"UBM is doing the opposite and lifting its exposure to Asia
and gaining a Middle East presence as well. Near term this looks
likely to be questioned but may well pay off in the long term if
the Middle East and Asia regain confidence," Barrett added.
Peer Informa Plc in September agreed to buy
U.S.-based information services company Penton for 1.18 billion
pounds ($1.50 billion). UBM spent $972 million to buy U.S. trade
show organiser Advanstar in 2014, which analysts said was
dilutive to the company's Asia exposure. reut.rs/2hz3BWS
"I don't think we're moving in the polar opposite direction
at all," Cobbold said, adding that post the deal emerging
markets including China would account for about 40 percent of
group sales, up from 36 percent.
UBM unveiled its "events first" strategy in November 2014,
with a focus on spending resources on its largest and most
profitable shows and acquisitions. reut.rs/2gUwRUa
UBM would continue to make bolt-on acquisitions and keep
looking at "bigger" ones, Cobbold added.
J.P. Morgan Cazenove provided financial advice to UBM, while
BCMS advised Allworld.
UBM shares were up 2.1 percent at 724 pence at 1507 GMT.
($1 = 0.7885 pounds)
(Reporting by Noor Zainab Hussain in Bengaluru; additional
reporting by Esha Vaish; Editing by Amrutha Gayathri and Martina