By Noor Zainab Hussain
(Reuters) - British business information group Informa Plc (L:INF) said it had agreed to buy U.S.-based information services company Penton for 1.18 billion pounds to expand in the United States and grow its global exhibitions business.
The transaction will be funded by a combination of new debt and equity, including a fully underwritten rights issue to raise 715 million pounds, the company said.
Informa will buy Penton from private equity firms MidOcean Partners and Wasserstein & Co, who will receive 1.11 billion pounds in cash and 76 million pounds in new Informa equity.
The deal, part of Informa's growth acceleration plan, would help the company generate nearly half of its annual pro-forma revenues from the U.S. and make its global exhibitions division one of the three largest in the country, with more than 70 U.S. shows annually.
"I think we've been very consistent that we want to grow in exhibitions and trade shows, business intelligence and information services ... we see the natural next rotation step for growth as being the United States of America," CEO Stephen Carter told Reuters.
Penton brings with it big show brands in aviation, agriculture, natural food products, infrastructure and TMT sectors, further "internationalising" Informa, Carter added.
Informa, which also publishes real-time news, research, market data and academic books, bought U.S. trade show operator Hanley Wood Exhibitions for 237 million pounds in 2014. http://reut.rs/2d1RjnO
Informa's global exhibitions business runs 170 trade and consumer events annually, including the China Beauty Expo, World of Concrete and Arab Health. The division accounted for about 22 percent of total revenue in 2015.
"We see the deal as a major positive for Informa, being earnings accretive and increasing its exposure to geographically and divisionally attractive areas," Liberum analysts wrote in a note.
Morgan Stanley (NYSE:MS), Centerview Partners, Rothschild and Barclays (LON:BARC) Bank PLC acted as financial advisors for the deal, Informa said.
The acquisition of Penton, expected to close in November, would add to the company's earnings in the first full financial year since completion, the company said.
Liberum analysts expect the addition of Penton to add 7-8 percent to Informa's earnings in the full year 2018.
The analysts also expect attention to switch to other potential events M&A targets including UBM Plc (L:UBM) and Tarsus Group Plc (L:TRS).
UBM paid $972 million in 2014 to buy U.S trade show organiser Advanstar Communications. http://reut.rs/2cH1wFS
Informa's shares were up 2.6 percent at 711.5 pence at 0842 GMT on the London Stock Exchange.
($1 = 0.7553 pounds)