LONDON, UK: Daily Mail and General Trust (DMGT) has agreed the sale of RMS, its insurance risk business, to Moody’s Corporation, a global integrated risk assessment firm, for approximately £1.425 billion in cash at completion.
DMGT in discussions to sell insurance risk division; Rothermere may acquire remaining shares of DMGT
Paul Zwillenberg, CEO, commented: “The sale of RMS marks another major milestone in DMGT’s transformation. It is the culmination of our strategy of investment in businesses combined with active portfolio management.
Organic investment in RMS’s software, data, data analytics, models and applications has created substantial shareholder value, particularly over the last few years as the team has delivered the accelerated product development programme. The deployment of Risk Intelligence, the world’s first SaaS¹ unified catastrophe model and analytics risk platform, was the achievement of a major milestone.
Consistent with our objective of delivering compelling returns for our investors, we have decided that now is the right time to monetise our investment in RMS at a premium valuation. Moody’s is ideally positioned to drive the next stage of RMS’s growth and deliver revenue synergies.
The addition of RMS will help accelerate Moody’s strategy of developing an integrated risk assessment platform that will enable customers to make better decisions and build resilience. The transaction represents a great opportunity for RMS’s employees, as well as for both businesses’ customers.”
The purchase price is in line with DMGT’s expectations at the time of the announcement on 12 July 2021 of a possible major reorganisation of the Group (the ‘Reorganisation Announcement’) and is subject to certain closing adjustments.
The sale of RMS is expected to complete in September 2021, subject to satisfaction of customary closing conditions, including regulatory clearance under the Hart-Scott-Rodino Act in the US. Completion of the sale will satisfy one of the pre-conditions of the possible offer by Rothermere Continuation Limited (RCL) for DMGT set out in the Reorganisation Announcement, which can be found at www.dmgt.com/investors.
As a result of the sale of RMS, Daily Mail and General Trust (DMGT) expects to incur aggregate costs of approximately £210m in respect of RMS minority shareholders, incentive plans for RMS employees, tax charges and disposal fees. In addition, as the sale will involve RMS’s retirement as a guarantor in respect of one of DMGT’s pension schemes, a payment currently estimated to be approximately £60m will be made into an escrow account in respect of that scheme.
Beyond that, Daily Mail and General Trust (DMGT) has contractual obligations to the pension schemes, of which the largest scheme is in actuarial deficit as measured on a technical provisions basis. The Group fully intends to honour its obligations and is currently in discussions with the pension scheme trustees (‘Trustees’) in relation to the impact of the proposed reorganisation of DMGT.
The outcome of those discussions will be material in the context of the Possible Offer and reaching a reasonably satisfactory position with the Trustees would satisfy a further pre-condition of the Possible Offer.
Pending conclusion of the discussion with the Trustees, it is not possible to be definitive about the exact amount of the cash component of the conditional special distribution under the possible reorganisation, but the agreed sale price of RMS is as expected and the current broad estimate of approximately 610 pence per share remains unchanged.
In the 12 months to 31 March 2021, RMS generated £33m adjusted operating profit and £38m EBITDA6 from revenues of £242m. Lazard & Co., Limited is acting as sole financial adviser to DMGT in relation to the disposal of RMS. Slaughter and May and Cravath, Swaine & Moore LLP are acting as DMGT’s legal advisers in relation to the disposal of RMS.
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5 Aug, 12:18 pm GMT+1 ·Disclaimer
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