Broker snap: Informa deal would require fresh capital

24th Nov 2009 12:08

Initial reaction to news that Lloyds List publisher Informa is in talks to buy German publisher Springer is likely to be negative, Panmure Gordon reckons, because of the need for Informa to raise fresh capital if the bid goes ahead.The broker also notes that Informa itself has long been seen as a bid target, and so bulking up with the addition of Springer would make Informa less digestible for a potential predator. On the plus side, 'there are obvious synergy opportunities here, which is the route to any value creation,' notes Panmure analyst Alex DeGroote.The broker said that the terms of any deal are hard to predict. Its sources suggest that Springer's debt totals around €2.1bn. 'It is unclear how this feeds through into likely acquisition cost (e.g. in terms of EV [enterprise value]). Again, according to sources, there have been talks recently about selling only a minority stake [in Springer],' the broker said. Either way, any deal for Springer will 'necessitate another, more significant fund raising,' which may not go down well so soon after May's £242m rights issue.