Broker snap: Uncertain times for Informa

30th Nov 2009 13:17

Uncertainty seems to be the watchword at business publisher Informa which, as well as being involved in talks to buy German publisher Springer, also has sizeable interests in Dubai.'Two of its [Informa's} bigger shows, Arab Health and City Scape, are run out of Dubai. In aggregate, Regional Events accounts for c23% of group revenue, and roughly 5% of group revenue derives from the Middle East (estimated £50m),' Panmure Gordon notes, adding that events revenue is highly sensitive to corporate confidence and local travel budgets.The broker retains its 'buy' recommendation of the shares, having turned bullish on the stock when it bolstered its balance sheet with a £240m rights issue in May. Part of the investment case was that Informa itself would become a viable takeover target, but the acquisition of Springer would wreck the thesis, Panmure asserts.'If INF [Informa] walks away from Springer, the shares should rebound sharply for two reasons: 1) The current multiple is low, and the original investment case is restored; and 2) There is some evidence of mid-large cap private equity coming back, and INF will be a target with previous approaches all well north of the current share price,' Panmure analsyt Alex DeGroote believes.