LONDON, UK: Informa Plc (LSE: INF.L) has agreed to divest Pharma Intelligence, the largest business within its Informa Intelligence division, to Warburg Pincus for £1.9bn, while separately commencing a share buyback.
Informa Plc, the international B2B Markets, Knowledge Services and Business Intelligence Group today announced two significant steps in its 2021-2024 Growth Acceleration Plan II (“GAP II”).
Stephen A. Carter, Group Chief Executive, Informa PLC, said: “Like GAP I, our GAP II programme is ambitious for growth, value creation and shareholder returns. Since announcing the intention to divest our Informa Intelligence portfolio, we have received significant interest in its high-performing brand portfolio, leading to today’s binding agreement for Pharma Intelligence, which reflects the quality and value created in this business, as well as its significant future potential.”
He added: “Our capital allocation discipline, combined with the pace and scale of today’s agreement, allows us to commence our share buyback programme with immediate effect. It also enables us to strengthen the balance sheet, generate funds for further growth investment in our two leadership businesses and retain a minority position in Pharma Intelligence to benefit from its future growth.”
Growth Acceleration Plan II – Increased Portfolio Focus
At Informa’s Capital Markets Day last December, the Group outlined GAP II, a four-year programme designed to create a more focused, higher growth business.
As part of GAP II, the Group announced its intention to focus investment on the two markets where it has leading brands and leadership positions of global scale, with attractive opportunities for further growth and expansion: Academic Markets & Knowledge Services (Taylor & Francis) and B2B Markets & Digital Services (Informa Markets, Informa Connect, Informa Tech).
The Group announced the intended divestment of its Informa Intelligence portfolio of businesses, which were transformed during the 2014-2017 GAP I investment, providing funds to accelerate investment and expansion in our two businesses with scale leadership positions.
Divestment of Pharma Intelligence
Over the past two months, Informa has received significant interest in its Pharma Intelligence business, a leading provider of specialist intelligence and data for Clinical Trials, Drug Development and Regulatory Compliance. In 2020, this business accounted for approximately 40% of Informa Intelligence reported divisional revenues of £305m and c.50% of reported divisional adjusted operating profit of £103m.
The value created in this high-quality business and its significant future growth potential have led to a binding agreement with Warburg Pincus that values Pharma Intelligence at £1.9bn, equating to an attractive EV/EBITDA multiple based on 2020 reported figures or 2021 expected outcomes.
Under today’s agreement, Warburg Pincus’ commitment to future investment and growth, and our own knowledge and belief in the business, has led to a structure whereby 85% of equity value is realised today, equating to c.£1.7bn in cash, pre-tax, with Informa retaining a c.15% shareholding in the business going forward. This c.15% equity interest ranks pari passu with Warburg Pincus’ equity and includes customary rights in the event of a sale of the business.
Retaining this shareholding, as well as Board representation, will contribute to the efficiency of the separation process, enabling the business to focus on its forward growth opportunities.
Today’s binding sale agreement for Pharma Intelligence, which has the full approval of the Informa Board as being in the best interests of shareholders is expected to complete by early June subject to relevant regulatory clearances.
Following completion and separation of Pharma intelligence, Informa will proceed with the next process in its GAP II divestment plans, focusing on its Financial Intelligence business comprising EPFR Global, IGM and Zephyr but excluding the retail banking joint venture, Curinos.
Adarsh Sarma, Co-Head of Europe, Warburg Pincus LLC said: “We are delighted to be the partner of choice for Informa and to have the opportunity to acquire Pharma Intelligence with its operating management team. Pharma Intelligence plays a critical role in supporting and maintaining the ecosystem that surrounds clinical trials, drug development and regulatory compliance, and we intend to invest and significantly grow the business and its product offerings. We are also pleased to be working again with Jay Nadler, who we worked with at MLM Information Services and Interactive Data Corp and he was previously CEO of Clarivate. He will also be joining the Board of the newly separated company.”
Stephen A. Carter, Group Chief Executive, Informa PLC, commented: “We received significant interest in the Pharma Intelligence business. We are delighted to partner with Warburg Pincus and share their view on its future growth potential, hence, we welcomed an agreement that represented value today and growth and value tomorrow.”
Share Buyback Programme
Alongside investing for growth, the Group has previously announced its intention to return a proportion of the proceeds from the divestment of Informa Intelligence to shareholders. Following today’s binding agreement for the Pharma Intelligence business, the Group intends to commence a share buyback programme.
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