Markets live chat transcript for the chat ending at 12:06 on 4 Sep 2008. Participants in this chat were: Paul Murphy (PM) Neil Hume (NH)
PM:
Ok – welcome to Markets Live
PM:
This is FT Alphaville stock knock about.
PM:
and rolling rate poll
PM:
That Monkey has just got underway below
PM:
Im gonig to do a forecast on the result of the poll
NH:
Morning. I am going for hold
NH:
and it will remain on hold until the middle of next year at least
PM:
i was going to say… Before ANYONE mentions the name Informa……
We don’t know what’s going on. The original source that detailed the Providence approach for Informa will not talk to us at present. If you own the shares and are worried that the bid will fail, sell the shares and stop worrying.
PM:
We should recall our conversation here on Monday:
PM:
NH: shares still trading at a big discount. few people reckon this deal will happen
NH: and one has to say the downside looks frightening if this is off
NH: a highly leveraged media company in this environment
NH: what price??
NH: 2 in front of it??
PM:
PM: So, if you own Informa you might want to take your profits
PM:
And then we should look at the price today – down 28p at 422p. That’s fall of 6.3%
NH:
Dipped below 400p at one stage earlier.
NH:
And then we should applaud the market-moving clout of CityAM.
NH:
The financial freesheet SPLASHED with this story this morning:
NH:
RUMBLING markets have led the private equity consortium circling Informa to slash its offer for publisher Informa, as another potential bidder dropped out of the race.
The consortium, led by Providence Equity Partners, made an indicative offer of 506p a share for the PR Week publisher in June, in a deal worth £3.4bn.
But it is understood that the consortium is now only prepared to pay between 440p to 450p a share for the company on the basis that market conditions have deteriorated since it first made its offer in June.
NH:
Shares in Informa have largely traded below the indicative offer of 506p following concerns that the consortium would not be able to raise enough funds in the current market to finance the deal. However, its bid has been bolstered after its main competition dropped out of the race.
The Dubai World Trade Centre, which is backed by the emirate, dropped out of a rival consortium with buyout firm Blackstone after the two failed to agree on a price.
Blackstone has now joined the Providence consortium, which also includes Carlyle Group. Hellman & Friedman, an original member of the Providence consortium, decided to walk away from the deal during the due diligence process. This was also due to concerns about the price being offered for Informa.
NH:
However, it is understood to be keeping a close eye on negotiations with a view to rejoining the group if conditions materially change.
PM:
We’re going to be kind here to CityAM for the foreseeable – cos obviously the paper is going to struggle to make it through the current downturn and it would be sad to see the venture close.
PM:
Anyway – back to Informa.
PM:
I know the system message above says our source won’t talk to us – but actually I have had a further chat and from what he says that CityAM piece is largely correct.
PM:
This bid is on a knife edge and – given the potential downside – we would not want to be holding the stock.
NH:
Yes, we are responsible for putting the 506p takeover price in the public domain – but that’s ages ago now.
NH:
Had the interims, general economic woe, — the PEs have struggled and struggled to get the debt financing organised.
NH:
Providence et al are just not going to pay anything like 500p. In fact, I wouldn’t be surprised if the offer has been reduced to 440p or even less.
NH:
That will leave Peter Rigby and his team at Informa in a difficult position: do they reject and watch the share price cave, hoping they can rebuild value over the medium term.
NH:
Or do they grab what money is no the table
PM:
And on that we just have no idea.
PM:
So if you own the stock – get out!
NH:
But no one reading this will own the stock, because we suggested taking your profits on Monday
PM:
Got any anlyst comment on this?
NH:
this is from Oriel Securities
NH:
Private equity consortium to lower bid?
NH:
• City am reports that the Private Equity consortium bidding for Informa is now only
prepared to pay between 440 - 450p a share
• Despite reports that financing for the deal is close to being secured, shares have
continued to trade at a significant discount to the mooted 500p original offer price
NH:
• We question whether a bid in the 440 - 450p range would succeed and expect the share price to fall back a bit this morning on the back of the news
Stock trades on 10.4x 2009E, ADD
NH:
and here’s what Panmure Gordon made of it
NH:
Back to the drawing board
The new proposed value of 450p is unsatisfactory, in our view. The deal is
becoming very messy, risk is enhanced. Now is the time to consider a breakup.
The medium-term fair value is still 500p, but shares will fall sharply to
reflect changed terms/ conditions.
This entry was posted by Paul Murphy on Thursday, September 4th, 2008 at 11:02 and is filed under Uncategorised.
