Steve Monnington Managing director Mayfield Media Strategies
Dealmakers
Steve Monnington digs into a billion-dollar deal that came out of the blue
T he news came to me out of the blue at 7.15am on a Thursday morning by a simple Whatsapp message from Tarsus CEO Douglas Emslie : ‘ Not every day you do a billion-dollar deal ! Just announced we ’ ve sold Tarsus to Informa . End of a 25-year build . Emotional day .’ The biggest exhibition M & A news of the year so far was a complete surprise for several reasons .
The price . $ 940m upfront and $ 45m deferred consideration payable if ( or when ) the Informa share price hits 850p within two years – it was 675p before the announcement . At this valuation Informa are clearly showing their confidence in the recovery and long term growth of the exhibition sector . The quoted multiple in their announcement of 9.9x Average 2023 / 24 EBIT ( Tarsus have biennial shows which are weighted towards the odd years ) is after allowing for synergies ( aka cost savings ) of $ 20m . This allows Informa to market the deal with a lower multiple .
Adjusting for this and factoring in the deferred consideration plus tax losses and working capital , the multiple could be considered to be as high as 14x . This would mean that we ‘ re firmly back in the land of pre-Covid chunky double digit multiples last seen when Providence bought CloserStill Media and Charterhouse originally took Tarsus private in 2019 .
The timing of the exit . It was widely assumed ( including by Tarsus themselves ) that Charterhouse would exit around 2025 , Tarsus has 25 % of its business in China , which has only started to open up in January this year so the overall business hasn ’ t yet recovered . This is also true of Informa ’ s business for the same reason , hence the confidence in the upside in their share price .
Private Equity selling to a trade buyer without a bidding war . Why would Charterhouse sell now if all this growth is to come and , more to the point , why would they sell to the first bidder rather than run a process ?
There are several reasons why Charterhouse agreed to sell now and to Informa in particular . The valuation was good ,
based on the next two years and therefore the coming recovery was built in . After company debt is deducted the deal is broadly 50 % cash and 50 % Informa shares . The cash can be deployed back into Charterhouse ’ s investment portfolio with potentially larger gains being achieved elsewhere . The Informa shares , which Charterhouse have to hold for two years , should yield a gain of at least 25 % as Informa ’ s business recovers .
The speed of the deal . Most transaction take at least six months . The initial call came from Informa at the end of January but there was a catch – they wanted to announce the transaction at the same time as their 2022 results which gave them just five weeks to negotiate an agreement , carry out due diligence and negotiate the legal documentation . Ironically having done this at breakneck speed , the transaction won ’ t actually complete until June / July after the US competition authorities have given clearance . At least this gives plenty of time for both companies to prepare for integration and for the Tarsus director / shareholders to plan how to spend their money .
Transactions and partnerships this period . ( February / March )
Buyer Business Country Sector Informa
Mark Allen Group
Stable Events
Stable Events
Stable Events
Nineteen Group
Emerald
GL Events
Tarsus
Bonhill
Northern Shooting Fair
LAPADA
Blenheim Int ’ l Horse Trials
Lone Worker Safety Live
Cocina Sabrosa Food & Beverage Trade Expo
Premier Vision ( remaining stake )
Global
UK / Asia
UK
UK
UK
UK
USA
France
Various
Finance
Leisure
Antiques
Equestrian
Safety
Hospitality
Fashion
www . exhibitionworld . co . uk Issue 2 2023 11