Broker snap: Uncertainty prompts Informa downgrade

25th Nov 2009 13:28

Nomura Securities has cooled on Lloyd's List publisher Informa after the business information firm confirmed it is in bid discussions with the shareholders of Springer Science & Business Media.'If the €400m (£365m) price for the equity suggested by the press (Financial Times, 24 November 2009) is accurate, the total EV [enterprise value] of circa €2.4bn (£2.2bn) implies a take-out EV/EBITDA [earnings before interest, tax, depreciation and amortisation] multiple of around 8.5x, which is more or less where Informa is trading now,' Nomura analyst Colin Tennant speculates.Though synergies should be significant, with Nomura estimating £54m of savings, and the quality of earnings would be higher, 'with academic and professional publishing accounting for over 80% of pro forma EBITA', Nomura has downgraded the stock from 'buy' to 'hold'.'The deal is far from closed, however, and in the absence of any firm information on pricing, synergies or financing, it is impossible for us to continue to recommend buying the shares until the situation becomes clear,' Tennant concludes.