TIDMITE
RNS Number : 0442O
ITE Group PLC
15 May 2018
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ITE Group plc
Proposed GBP300 million acquisition of the Ascential Exhibitions
Business
and fully underwritten rights issue
Summary
-- ITE Group plc today announces that it has entered into a
conditional agreement to acquire Ascential Events Limited from
Ascential plc, based on an enterprise value of GBP300 million
(calculated on a cash-free debt-free basis and subject to
normalised working capital).
-- The Ascential Exhibitions Business, which organises
market-leading exhibitions that bring business communities together
to connect and trade, includes two global industry-leading
exhibitions brands, Bett and CWIEME, and a number of market-leading
UK exhibitions brands such as the Spring and Autumn Fairs and Pure.
In the financial year ended 31 December 2017, these brands
generated revenues of GBP77.5 million and EBITDA of GBP24.0
million[1].
-- The Directors believe that the Ascential Exhibitions Business
is an attractive, high-quality portfolio of 'must-attend'
exhibitions. The Acquisition aligns with ITE's continuing TAG
Programme and specifically its strategy of making product-led
acquisitions of scalable events brands which are seen as offering
strong growth potential under ITE's ownership.
-- The Acquisition will diversify ITE's exposure to some
end-market verticals such as education technology and coil winding,
electric motor and transformer manufacturing technologies that the
Directors believe are attractive and supported by structural growth
drivers, creating a more balanced portfolio of events in the
Enlarged Group.
-- The Acquisition will also diversify ITE's geographic
footprint, giving rise to further opportunities for growth. In
particular, the Directors believe that following the Acquisition,
Bett and CWIEME will benefit from the leveraging of ITE's wider
geographic footprint and existing infrastructure, providing
geo-cloning opportunities.
-- Attractive financial effects of the Acquisition:
o Expected to be earnings enhancing in the first full year
following Completion (FY2019)
o The Directors expect to be able to maintain ITE's existing
dividend policy following Completion
o Net debt / pro-forma 2017A EBITDA within target range of 1.5x
- 2x[2]
-- The Directors estimate that, following Completion, the
Enlarged Group will be able to achieve annualised pre-tax gross
cost synergies of GBP4 million - GBP5 million by implementing an
integration plan that seeks to eliminate cost duplication, generate
cost savings from economies of scale and drive operational
efficiencies in the Ascential Exhibitions Business.
-- The Directors intend to re-invest GBP2 million - GBP2.5
million from FY2019, designed to drive additional revenue growth
from FY2020 in part to realise a number of incremental revenue
opportunities that are expected to arise as a result of the
Acquisition. These include building the existing geo-clones to
scale, additional geo-cloning of events into markets where ITE
already has a local platform and where relevant, the cross-selling
of events. In addition, further focus and investment will be made
into visitor marketing to improve retention and customer ROI.
-- The Acquisition and related expenses are expected to be
funded by the proceeds of a fully underwritten rights issue by ITE,
which will raise up to approximately GBP315 million (before
expenses). With respect to this rights issue, the Company has
entered into a standby underwriting agreement with Investec Bank
plc pending launch of the rights issue and publication of the
combined circular and prospectus. Numis Securities Limited is
expected to underwrite the Rights Issue with Investec Bank plc in
due course.
-- The Company also intends to raise approximately GBP50 million
through amending its existing debt facilities, which would allow it
to reduce the Rights Issue to approximately GBP265 million (before
expenses).
-- The Acquisition is a Class 1 transaction for ITE under the
Listing Rules and is therefore conditional, inter alia, upon the
approval by Shareholders. The Directors intend to unanimously
recommend that ITE shareholders vote in favour of the resolutions
to approve the Acquisition and to authorise ITE to proceed with the
Rights Issue.
-- The Directors intend to take up their entitlements under the Rights Issue in full.
-- ITE expects to publish a combined circular and prospectus in
connection with the Acquisition and the Rights Issue, including the
notice of General Meeting in early June 2018. Subject to the
satisfaction of the conditions to the Acquisition, Completion is
expected to occur in July 2018.
Commenting on the Acquisition, Mark Shashoua, Chief Executive
Officer of ITE, said:
"Today, we have announced an agreement to acquire a highly
complementary portfolio of exhibitions from Ascential. Each show is
market-leading and two are truly global. This acquisition
accelerates our strategy of becoming product-led and building a
portfolio of content-driven, must-attend events regardless of
geography.
A number of our senior management team, including myself, know
these assets extremely well and see a clear opportunity to drive
cost synergies, and provide the investment, operational rigour and
international platform required to drive growth. We expect the
acquisition to be earnings enhancing during FY2019, our first full
financial year of ownership, and our Board unanimously considers
the acquisition and the rights issue to be in the best interests of
ITE and its shareholders."
This summary should be read in conjunction with the full text of
this announcement. Terms defined in this summary have the same
meaning when used in the full text of this announcement.
Enquiries:
+44 (0) 20 7596
ITE 5017
Mark Shashoua, Chief Executive Officer
Andrew Beach, Chief Financial Officer
Melissa McVeigh, Director of Communications
+44 (0) 20 7597
Investec 5970
(Sponsor, Financial Adviser, Joint Broker, Joint Bookrunner and Lead
Underwriter)
Corporate Finance: Andrew Pinder, Junya Iwamoto,
David Anderson
Corporate Broking: Sara Hale, Chris Sim, Neil Coleman
+44 (0) 20 7260
Numis 1000
(Joint Broker, Joint Bookrunner and Joint Underwriter)
Nick Westlake
Christopher Wilkinson
Toby Adcock
Hugo Rubinstein
+44 (0) 20 3727
FTI Consulting 1000
(Financial PR)
Charles Palmer
Emma Hall
1. Introduction
The Company today announces that it has entered into a
conditional agreement to acquire the entire issued and to be issued
share capital of Ascential Events Limited, which owns and operates
the Ascential Exhibitions Business, based on an enterprise value of
GBP300 million. In addition, the Company announces that it has
entered into the Standby Underwriting Letter under which Investec
has conditionally agreed to underwrite a rights issue by the
Company to raise approximately GBP315 million (before expenses).
Numis is also expected to underwrite the Rights Issue with Investec
in due course.
The Target is the holding company of the Ascential Exhibitions
Business, which organises market-leading exhibitions that bring
business communities together to connect and trade. The Ascential
Exhibitions Business includes two global industry-leading
exhibitions brands, Bett and CWIEME, and a number of market-leading
UK exhibitions brands such as the Spring and Autumn Fairs and
Pure.
The Directors believe the Ascential Exhibitions Business is an
attractive, high-quality portfolio of 'must-attend' exhibitions.
The acquisition of the Ascential Exhibitions Business aligns with
ITE's TAG Programme and specifically its strategy of making
product-led acquisitions of scalable events brands which the
Directors believe offer strong growth potential under ITE's
ownership. The Acquisition will diversify ITE's exposure to
end-market verticals, creating a more balanced portfolio of events
in the Enlarged Group, by adding market-leading events in a number
of industry verticals including: education technology; coil
winding, electric motor and transformer manufacturing technologies;
home and gift; fashion and retail; broadcast and video; and
gardening and outdoor living. The Acquisition will also diversify
ITE's geographic footprint, giving rise to further opportunities
for growth. In particular, the Directors believe that following the
Acquisition, Bett and CWIEME will benefit from leveraging ITE's
wider
geographic footprint and existing infrastructure, providing
geo-cloning opportunities.
The Acquisition, because of its size in relation to the Company,
is a Class 1 transaction for ITE under the Listing Rules and is
therefore conditional, inter alia, upon the approval by
Shareholders.
The Company also announces today that it is in discussions with
a view to increasing the size of its existing banking facilities
such that it would be able to draw down GBP50 million from its debt
facility to part fund the Acquisition, which would reduce the
required size of the Rights Issue to GBP265 million. These
arrangements are expected to be concluded by the time the Combined
Circular and Prospectus is published and Rights Issue is formally
launched.
The Board unanimously considers the Acquisition and the Rights
Issue to be in the best interests of ITE and its Shareholders as a
whole.
2. Background to and strategic rationale for the Acquisition
The ITE Group is a leading organiser of international trade
exhibitions and conferences, specialising in organising
'must-attend' events that help to connect attendees to their target
audiences around the world, making them the premier events in which
to participate. Exhibitors use the ITE Group's exhibitions and
conferences as sales and marketing events, where they interact with
visitors, promote new and existing products, generate leads and
ultimately make sales, with the events acting as an industry
platform bringing a business community together under one roof.
The ITE Group serves its communities of exhibitors, sponsors and
delegates by helping them connect with and learn from their
contemporaries and industry experts, and by creating and providing
access to content that helps people and businesses make more
informed decisions. The ITE Group organises over 200 exhibitions
and conferences each year, many of which are market-leading events
and well-known brands in key industry sectors, and is structured
into five operating divisions based on: geographic location, being
Asia, Central Asia, Eastern & Southern Europe, and Russia; and
a brands division ("Brands"), a portfolio of international events
brands.
In 2017, the ITE Group embarked upon a targeted and clear
strategy: the TAG Programme. As reported in its results for the
year ended 30 September 2017, good progress has been made on the
TAG Programme, with operational and financial momentum leading to
improved trading trends across the business. This operational and
financial progress has continued through the first half of the 2018
financial year, as reported in its results for the six months ended
31 March 2018 announced earlier today.
2.1 ITE's strategy - the TAG Programme
At the start of 2017, the ITE Group undertook a thorough and
detailed review of its business, which included reviews by product,
geography, structures, systems, sales, marketing, IT and finance.
The outputs of this review, unveiled in May 2017, resulted in an
evolved strategy and the introduction of the three year TAG
Programme.
At the Group's strategy update in May 2017, a new vision was
announced: "To create the world's leading portfolio of
content-driven, must-attend events delivering an outstanding
experience and ROI for our customers".
The Group's aim is to organise and run market-leading events by
focusing on the needs of exhibitors and visitors and having a
product-led strategy. To deliver this aim, the TAG Programme is
being implemented across the Group and comprises three pillars:
a) create a scalable platform to generate real organic growth;
b) actively manage ITE's portfolio; and
c) make selective product-led acquisitions.
a) Create a scalable platform to generate real organic growth
The Group is moving to a centralised and product-led model
because the evolution of customer expectations means that local
markets now expect events to be of a standard, international
quality. Furthermore, global multinationals are starting to choose
a single events company to exhibit with, that caters for them
globally as a one-stop shop that is able to deliver a consistently
high standard of service everywhere.
TAG Programme investments related to creating a scalable
platform are spread across five areas: to create best practice
functions and teams; invest in show operations; build capability
and talent; drive a performance culture; and build and maintain fit
for purpose IT infrastructure and systems.
b) Actively manage ITE's portfolio
The Group has segmented its business into "Core" and "Non-Core"
events to enable ITE management to increase its focus on events
that are considered to present the greatest opportunities, whilst
reducing distraction from others.
The Core events are those that the Directors believe are of
strategic importance to the Group's future, including the Group's
largest events and those with the greatest potential for growth.
The Non-Core events consist of smaller shows which the Directors
believe have less potential for growth.
As part of the Group's strategy, a top priority remains to apply
TAG Programme investments to its Core events, to realise their full
potential. This strategy includes investing in content to drive
greater customer experience for exhibitors and visitors, and
improved customer retention.
The Group's international sales teams have focused on ITE's Core
events and this has contributed to strong revenue growth from Core
events as evidenced by combined double digit like-for-like revenue
growth delivered from four of its top 10 events (by revenue) which
occurred during the six months ended 31 March 2018.
During the year ended 30 September 2017, the Group discontinued
37 Non-Core events, with a further 22 discontinued in the six
months ended 31 March 2018. On 24 April 2018, the Group also
announced the disposal of TradeLink ITE Sdn. Bhd., owner of the
Metaltech exhibition in Malaysia for GBP4.2 million, as a
continuation of this pillar of the TAG Programme.
In line with its product-led strategy, the Group plans to
continue to proactively review its portfolio on an ongoing
basis.
c) Selective product-led acquisitions
The Group's strategy includes making selective product-led, not
geography-led, acquisitions that will be assessed on the following
criteria:
-- Scalability - in sectors with high growth potential
-- A distinct customer value proposition - serving a clear part of an industry sector
-- Position in attractive markets for events serving a high growth underlying market
-- Evidence of strong organic revenue growth and profit margins
-- Potential to roll out internationally - dependent on the product
-- Earnings accretive - offering a good return on invested capital
The Directors believe the Acquisition fulfils these
criteria.
2.2 The Acquisition and key benefits
The Directors believe that the strategic rationale for the
Acquisition is compelling and in strong alignment with the TAG
Programme.
The key rationales for, and benefits of, the Acquisition
include:
The Ascential Exhibitions Business is a high-quality,
product-led portfolio with global brands
The Ascential Exhibitions Business includes two global
industry-leading events brands, Bett and CWIEME, and a number of
market-leading UK events brands such as the Spring and Autumn Fairs
and Pure.
Bett is the leading education technology series of global events
and leadership summits. CWIEME is the leading global event for coil
winding, electric motor and transformer manufacturing technologies.
Spring and Autumn Fairs are the UK's leading home and gift shows
for the retail industry. Pure is London's leading fashion trade
show.
Bett and CWIEME are industry-leading global brands serving
markets which the Directors believe are attractive end markets
supported by structural growth drivers. Under ITE's ownership, they
are expected to benefit from exploiting ITE's diversified
geographic footprint and international infrastructure, better
addressing existing customer demand which is currently
unfulfilled.
Spring and Autumn Fairs, Pure and the other UK events brands
being acquired are market leading, profitable and cash generative.
Under ITE's ownership, the Directors believe the events will
benefit from dedicated management focus.
Strong growth potential of the Ascential Exhibitions Business
under ITE's management
The ITE CEO, Mark Shashoua, and COO, John Gulliver, will lead
the integration and growth of the Enlarged Group after Completion.
The ITE management team has a strong track record in the
exhibitions and events market, Mark and John having previously held
the positions of CEO and CFO of the Ascential Exhibitions Business
respectively until early 2016.
The Directors believe the Ascential Exhibitions Business would
have strong growth potential under ITE's ownership because: (i) of
Mark and John's previous positions as CEO and CFO (respectively)
until early 2016 providing them good insight into how to drive
growth across the acquired events portfolio; (ii) given the scale
of the Ascential Exhibitions Business brands, they will all form
part of, and be managed as, Core events within ITE, receiving
dedicated management focus and attention; and (iii) the ITE
management team's experience of, knowledge of and focus on the
events industry.
In particular, for Spring and Autumn Fairs, Pure and the other
UK events brands being acquired, ITE intends to refresh these
events through focussing on delivering greater exhibitor return on
investment, re-design of the event space and restructuring of the
sales strategy.
The Directors believe that the ITE management team can create
value and returns in the Enlarged Group by improving the customer
experience, which is expected to result in exhibitor, attendance
and yield growth.
The Directors believe that the Enlarged Group will be able to
accrue considerable additional benefits from the sharing of best
practice between ITE and the Ascential Exhibitions Business.
Management intends to implement its best practices in the Enlarged
Group as it believes there are opportunities to grow both its
immature and mature events, if best practices are shared.
Operating synergies
ITE intends to implement an integration plan that seeks to
eliminate cost duplication, generate cost savings from economies of
scale and drive operational efficiencies in the Ascential
Exhibitions Business.
In addition, ITE has identified a number of incremental revenue
opportunities that are expected to arise as a result of the
Acquisition, including cross-selling of sponsorship opportunities
across the ITE events portfolio, customer cross-marketing of
events, and geo-cloning of exhibition brands.
Delivering an enlarged ITE with a more diverse portfolio
As part of the TAG Programme, ITE has been focused on migrating
from being a geographically structured business with strengths in
emerging markets, to one that is product-led, with strong regional
platforms. The Acquisition will diversify ITE's business across
geographic, currency and end-market vertical exposures.
As a result of the Acquisition, ITE's portfolio will be
significantly strengthened through the integration of the Ascential
Exhibitions Business, by adding market-leading events in a number
of industry verticals including: education technology; coil
winding, electric motor and transformer manufacturing technologies;
home and gift; fashion and retail; broadcast and video; and
gardening and outdoor living.
The Ascential Exhibitions Business' portfolio of seven events
brands, combined with ITE's over 200 events will position ITE as
one of the largest owner/operators in the business-to-business
face-to-face media segment. Within this, it will become one of the
largest operators of exhibitions globally, according to data from
AMR International. The Directors believe that the global market for
exhibitions and events remains a highly attractive growth market,
with AMR International estimating that the industry was worth $26.1
billion in 2017, with forecast growth at an annualised rate of 4.2
per cent. between 2016 and 2021, subject to regional
variations.
Offers attractive financial returns
When making the decision to pursue the Acquisition, the ITE
Directors considered a number of factors, which included the
Ascential Exhibitions Business' profitability margins, availability
of realisable operating synergies, and the revenue growth
opportunities realisable by ITE under its ownership.
The Acquisition will also reduce ITE's exposure to Russia-based
revenue, with the proportion of revenue from Russia reducing on a
pro-forma basis[3] from approximately 47 per cent. to 31 per
cent.
The Directors believe the Acquisition will be earnings enhancing
in the first full financial year (ending 30 September 2019)
following Completion.
3. Summary information on ITE Group
ITE Group was established in 1991 when it first held a series of
trade exhibitions in Russia in key sectors of the economy, and
through growth, acquisition and different phases of development,
has become a leading organiser of international trade exhibitions
and conferences.
The ITE Group specialises in organising events that help to
connect attendees to their target audiences around the world.
Exhibitors use the ITE Group's exhibitions and conferences as sales
and marketing events, where they interact with visitors, promote
new and existing products, generate leads and ultimately make
sales, with the events acting as an industry platform bringing a
business community together under one roof.
The ITE Group serves its communities of exhibitors, sponsors and
delegates by helping them connect with and learn from their
contemporaries and industry experts, and by creating and providing
access to content that helps people and businesses make more
informed decisions. The ITE Group organises over 200 exhibitions
and conferences each year, many of which are market-leading events
and well-known brands in key industry sectors, and is structured
into five operating divisions based on: geographic location, being
Asia, Central Asia, Eastern & Southern Europe, and Russia; and
Brands, a portfolio of international events brands.
ITE is currently the ninth largest conference and exhibition
organiser by revenue, and has strong market positions in a number
of emerging markets.
In FY2017, the ITE Group generated total revenues of GBP152.6
million and headline profit before tax of GBP31.6 million.
With its headquarters in London, the ITE Group employs 1,383
people across its 30 offices globally.
4. Summary information on the Ascential Exhibitions Business
The Ascential Exhibitions Business organises market-leading
exhibitions that bring business communities together to connect and
trade, with the events brands being Bett (including and The
Education Show), CWIEME, the Spring and Autumn Fairs, Pure, Glee
and BVE.
The Ascential Exhibitions Business operates within Ascential's
Exhibitions and Festivals division, which includes additional
brands such as Cannes Lions and Money20/20 that are not being
acquired as part of the Acquisition.
Bett is the leading educational technology series of global
events and leadership summits. CWIEME is the leading global event
for coil winding, electric motor and transformer manufacturing
technologies. The Spring and Autumn Fairs are two of the UK's
leading home and gift shows for the retail industry. Pure is
London's leading fashion trade show.
In FY2017, the Ascential Exhibitions Business generated total
revenues of GBP77.5 million and Adjusted EBITDA of GBP24.0
million[4] after removing results of events not being acquired,
discontinued event revenue and profit, and on a constant currency
basis.
With its headquarters in London, the Ascential Exhibitions
Business employs 197 people across its four offices globally.
In FY2017, Ascential Events Limited, the holding company of the
Ascential Exhibitions Business, generated Adjusted EBITDA of
GBP23.1 million and had gross assets of approximately GBP58 million
as at 31 December 2017.
5. Financial effects of the Acquisition
Cost savings and integration
The Directors estimate that, following Completion, the Enlarged
Group will be able to achieve annualised pre-tax gross cost
synergies of GBP4 million - GBP5 million by implementing an
integration plan that seeks to eliminate cost duplication, generate
cost savings from economies of scale and drive operational
efficiencies in the Ascential Exhibitions Business.
The Directors intend to re-invest GBP2 million - GBP2.5 million
from 2019, designed to drive additional revenue growth from FY2020
in part to realise a number of incremental revenue opportunities
that are expected to arise as a result of the Acquisition. These
include building the existing geo-clones to scale, additional
geo-cloning of events into markets where ITE already has a local
platform and where relevant, the cross-selling of events. In
addition, further focus and investment will be made into visitor
marketing to improve retention and customer ROI.
ITE has, together with its advisers, conducted due diligence on
the Ascential Exhibitions Business, including having discussions
with senior management, all of which has supplemented ITE's
existing knowledge of the Ascential Exhibitions Business. This
diligence process coupled with ITE's prior knowledge of the
Ascential Exhibitions Business has enabled the ITE executive team
to prepare their integration plan.
Leverage
The Company intends to raise approximately GBP50 million through
amending its existing debt facility at the same pricing as ITE's
existing debt facility, which would allow it to reduce the Rights
Issue to approximately GBP265 million.
Following Completion, and assuming the Rights Issue had
completed and the amended bank facilities were fully drawn, the pro
forma leverage as at 30 September 2017 for the Enlarged Group would
have been within ITE's stated target range of 1.5x to 2x EBITDA[5].
The ITE Directors are expecting to be able to deleverage the
business further during the year ending 30 September 2019.
6. ITE current trading and prospects
ITE has today published its interim results for the six months
ended 31 March 2018.
Mark Shashoua, Chief Executive Officer, made the following
comments in relation to the Company's current trading and
prospects:
"The TAG programme is delivering early benefits with improved
financial performance from our Core events delivering like-for-like
volume, revenue and headline PBT growth for the first time in four
years.
Cash conversion remains strong and the Group enters the second
half with high visibility of revenues having contracted GBP144m of
revenue for the current financial year as at 11 May 2018,
representing circa 89% of market expectations for the full year. As
a result of our focus on forward bookings, the Group has also
already contracted GBP31m of forward bookings for FY2019,
representing 19% of consensus revenue. This is up 31% on a
like-for-like basis and the improved level of bookings partly
reflects the Group's focused sales initiatives on Core events, in
line with its strategy.
The like-for-like growth and cash conversion have allowed
management to invest GBP1.5m more in future period events than at
this stage last year.
The combination of good progress on TAG and the proposed
acquisition of Ascential Events Limited - a portfolio of market
leading products that the management of ITE have known for a long
time and that fit well with our strategy means that ITE is taking
significant steps towards realising its vision of creating the
world's leading portfolio of content-driven, must-attend events
that deliver an outstanding experience and ROI for our
customers."
ITE continues to perform in line with the Board's expectations
and the Board is confident of the financial and trading prospects
of the Company for the current financial year.
7. Principal terms of the Acquisition
Under the terms of the Sale and Purchase Agreement, which is
dated today, ITE Enterprises Limited (a subsidiary of the Company)
has agreed to acquire the entire issued and to be issued share
capital of the Target, the holding company for the Ascential
Exhibitions Business based on an enterprise value (calculated on a
cash-free debt-free basis and subject to normalised working
capital) of GBP300 million. The consideration, which is payable in
cash, will be adjusted, as required, following completion of
Acquisition based on a completion accounts mechanism. The
Acquisition is a Class 1 transaction for each of ITE and Ascential
under Listing Rule 10.
The Acquisition is conditional, inter alia, upon obtaining the
approval of Shareholders and of Ascential's shareholders, the
Standby Underwriting Letter or the underwriting agreement to be
entered into in connection with the Rights Issue (and replacing the
Standby Underwriting Letter), as the case may be, having become
unconditional and not having been terminated, the Combined Circular
and Prospectus being published and the new ordinary Shares to be
issued under the Rights Issue being admitted to listing on the
premium segment of the Official List and to trading on the London
Stock Exchange's main market for listed securities. The Sale and
Purchase Agreement is terminable in certain circumstances,
including in the event that the conditions are not satisfied by 13
June 2018, the Combined Circular and Prospectus has not been
published by 13 June 2018, Ascential has not published its circular
to its shareholders under Listing Rule 10 by 31 July 2018, the
Standby Underwriting Letter or subsequent underwriting agreement is
terminated, there is a material breach of the warranties given by
the seller under the Sale and Purchase Agreement or there is
material adverse change affecting the Ascential Exhibitions
Business.
Under the Sale and Purchase Agreement, both the seller and the
buyer have agree to pay a break fee to the other in certain
circumstances, including in the event that the required shareholder
approvals are not obtained or, in the case of ITE, the Standby
Underwriting Agreement or subsequent underwriting agreement are
terminated or fails to become unconditional. The obligations of ITE
Enterprises Limited under the Sale and Purchase Agreement are
guaranteed by the Company.
8. Principal terms of the Rights Issue
With respect to the Rights Issue, ITE has entered into the
Standby Underwriting Letter. The Standby Underwriting Letter
envisages a nominal value underwriting under which the number of
new ordinary shares in the capital of ITE to be issued will be set
by reference to an issue price to be agreed by ITE and Investec
prior to publication of the Combined Circular and Prospectus. If
the parties cannot agree, the appropriate number of shares will be
issued at nominal value in order to achieve the desired fundraising
amount. The Standby Underwriting Letter contains customary
representations and warranties, undertakings, conditions and
termination rights.
It is intended that prior to the Combined Circular and
Prospectus being published, ITE will enter into an underwriting
agreement with the Underwriters under which the Underwriters will
underwrite the Rights Issue which is expected to raise
approximately GBP265 million (on the basis that the Company's
existing debt facilities are increased to allow GBP50m to be drawn
down under the Group's debt facilities to part fund the
Acquisition). If entered into, that underwriting agreement would
replace the Standby Underwriting Letter.
The Rights Issue will not be conditional on completion of the
Acquisition. If the Rights Issue were to proceed but the
Acquisition does not complete the Directors' current intention is
that the proceeds of the Rights Issue will be applied to reducing
the Company's net indebtedness on a short-term basis while the
Directors evaluate alternative uses of the funds. If no such uses
can be found, the Directors will consider how best to return all or
part of the proceeds to Shareholders. Such a return could carry
fiscal costs for certain Shareholders, will have costs for ITE and
would be subject to applicable securities laws.
9. Dividends
For FY2017, ITE paid a dividend of 4.0 pence per share (2016:
4.5 pence per share). For the six month period ended 31 March 2018,
ITE has declared an interim dividend of 1.5 pence per share (2017:
1.5 pence per share).
The Directors understand the importance of dividend payments to
Shareholders and intend to maintain ITE's existing policy of
declaring dividends at a coverage ratio of more than 2x headline
earnings per share, subject to the Company having sufficient
distributable reserves and cash available for this purpose.
10. Expected timetable to Completion
The Combined Circular and Prospectus containing further details
on the Acquisition and Rights Issue, the Directors' recommendation,
the terms of the Rights Issue, the notice of General Meeting and
the Resolutions is expected to be published in early June 2018.
Subject to satisfaction of the conditions to the Acquisition,
Completion is expected to occur in July 2018.
Appendix I
Definitions
The definitions set out below apply throughout this
announcement, including the summary, unless the context requires
otherwise:
"Acquisition" the proposed acquisition of the
entire issued share capital of the
Target by the Company
"Adjusted EBITDA" earnings before interest, tax, depreciation,
amortisation of intangible assets
acquired through business combinations,
share based payments, and exceptional
items;
"Ascential" Ascential plc, a company incorporated
in England and Wales with registered
number 9934451, whose registered
office is at The Prow, 1 Wilder
Walk, London W1B 5AP
"Ascential Exhibitions Business" Ascential's business of organising
organises exhibitions, congresses
and festivals, of which the Target
is the holding company
"Board" the board of directors of the Company
"Combined Circular and Prospectus" this combined class 1 circular and
prospectus relating to the Rights
Issue and Acquisition to be prepared
according to the Listing Rules and
Prospectus Rules and published by
the Company
"Companies Act" the Companies Act 2006, as amended
from time to time
"Completion" completion of the Acquisition;
"Directors" the directors of the Company at
the date of this announcement, and
"Director" means any one of them
"Enlarged Group" the ITE Group as enlarged by the
Rights Issue proceeds and the Acquisition
(following completion of the Rights
Issue and Completion, as applicable)
"FCA" or "Financial Conduct the Financial Conduct Authority
Authority" of the United Kingdom and, where
applicable, includes any successor
body or bodies carrying out the
functions currently carried out
by the Financial Conduct Authority
"FCA Handbook" the handbook of rules and guidance
made by the FCA under FSMA
"FSMA" the Financial Services and Markets
Act 2000, as amended
"Investec" Investec Bank plc
"ITE" or the "Company" ITE Group plc, a public limited
company incorporated in England
and Wales with registered number
1927339, whose registered office
is at 105 Salusbury Road, London
NW6 6RG
"ITE Group" or the "Group" the Company, together with its subsidiaries
and subsidiary undertakings from
time to time
"ITE Group's website" www.ite-exhibitions.com
"Listing Rules" the listing rules made under Part
VI of FSMA (as set out in the FCA
Handbook), as amended from time
to time
"Market Abuse Regulation" the Market Abuse Regulation (EU)
(596/2014)
"Numis" Numis Securities Limited
"Ordinary Shares" ordinary shares of 1 pence each
in the capital of the Company
"Pounds" or "Pounds Sterling" the lawful currency of the United
or "GBP" or "GBP" or "pence" Kingdom
or "p"
"Prospectus Rules" the prospectus rules made under
Part VI of FSMA (as set out in the
FCA Handbook), as amended
"Regulatory Information Service" one of the regulatory information
services authorised by the FCA to
receive, process and disseminate
regulatory information from listed
companies
"Resolutions" the resolutions to approve the Acquisition
and Rights Issue to be set out in
the notice of general meeting to
be included in the Combined Circular
and Prospectus and Resolution shall
be construed accordingly
"Rights Issue" the issue by way of rights of new
Ordinary Shares on the terms and
conditions to be set out in the
Combined Circular and Prospectus
and, for shareholder who hold their
shares in certificated form, the
accompanying provisional allotment
letters
"RoI" return on investment
"Sale and Purchase Agreement" the sale and purchase agreement
dated 15 May 2018 in respect of
the entire issued share capital
of the Target between Ascential
UK Holdings Limited, ITE Enterprises
Limited, Ascential Group Limited
and the Company
"Shareholder(s)" shareholders whose Ordinary Shares
are registered on the Company's
register of members
"Standby Underwriting Letter" the standby underwriting letter
dated 15 May 2018 between the Company
and Investec
"subsidiary" has the meaning given in section
1159 of the Companies Act
"subsidiary undertaking" has the meaning given in section
1162 of the Companies Act
"TAG Programme" ITE's continuing strategic Transformation
& Growth Programme comprised of
three pillars (1) creating a scalable
platform; (2) managing the portfolio
and (3) product-led acquisitions;
underpinned by a performance-led
culture.
"Target" Ascential Events Limited, a company
incorporated in England and Wales
with registered number 7925964,
whose registered office is at c/o
Ascential Group Limited, The Prow,
1 Wilder Walk, London W1B 5AP
"Underwriters" Investec and Numis
"United Kingdom" or "UK" the United Kingdom of Great Britain
and Northern Ireland
"United States" or "US" the United States of America, its
territories and possessions, any
state of the United States and the
District of Columbia
"US$", "USD", "US dollars" the lawful currency of the United
or "US$ cents" States
IMPORTANT NOTICE
The contents of this announcement have been prepared by and are
the sole responsibility of ITE Group.
This announcement is not a prospectus but an advertisement and
investors should not acquire any securities referred to in this
announcement except on the basis of the information contained in
the Combined Circular and Prospectus when published. The
information contained in this announcement is for background
purposes only and does not purport to be full or complete. No
reliance may be placed by any person for any purpose on the
information contained in this announcement or its accuracy,
fairness or completeness. The information in this announcement is
subject to change
A copy of the Combined Circular and Prospectus when published
will be available from the registered office of ITE Group and on
ITE Group's website at www.ite-exhibitions.com provided that the
Combined Circular and Prospectus will not, subject to certain
exceptions, be available to shareholders in certain excluded
jurisdictions. Neither the content of ITE Group's website nor any
website accessible by hyperlinks on ITE Group's website is
incorporated in, or forms part of, this announcement.
This announcement is not for publication or distribution,
directly or indirectly, in or into the United States. The
distribution of this announcement may be restricted by law in
certain jurisdictions and persons into whose possession any
announcement or other information referred to herein comes should
inform themselves about and observe any such restriction. Any
failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction.
This announcement does not contain or constitute an offer of, or
the solicitation of an offer to buy, securities to any person in
the United States, Australia, Canada, Japan or South Africa or in
any jurisdiction to whom or in which such offer or solicitation is
unlawful. The securities will not be registered under the US
Securities Act of 1933, as amended (the "Securities Act") or under
any securities laws of any state or other jurisdiction of the
United States, and may not be offered, sold, taken up, exercised,
resold, renounced, or otherwise transferred, directly or
indirectly, in or into the United States except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and in compliance
with any applicable securities laws of any state or other
jurisdiction of the United States. There will be no public offering
of the securities in the United States.
The offer and sale of securities referred to herein has not been
and will not be registered under the applicable securities laws of
Australia, Canada, Japan or South Africa. Subject to certain
exceptions, the securities referred to herein may not be offered or
sold in Australia, Canada, Japan or South Africa or to, or for the
account or benefit of, any national, resident or citizen of
Australia, Canada, Japan or South Africa. There will be no public
offer of the securities in Australia, Canada, Japan or South
Africa.
No statement in this announcement is intended as a profit
forecast and no statement in this announcement should be
interpreted to mean that the future earnings per share, profits,
margins or cash flows of the Enlarged Group will necessarily match
or be greater than the historical published earnings per share,
profits, margins or cash flows of the ITE Group.
This announcement does not constitute a recommendation
concerning the Rights Issue. The price and value of securities can
go down as well as up. Past performance is not a guide to future
performance. The contents of this announcement are not to be
construed as legal, business, financial or tax advice. Each
shareholder or prospective investor should consult his, her or its
own legal adviser, business adviser, financial adviser or tax
adviser for legal, financial, business or tax advice.
Investec Bank plc ("Investec") is authorised by the Prudential
Regulation Authority (the "PRA") and regulated in the United
Kingdom by the FCA and the PRA and is acting exclusively for the
Company and for no one else in connection with the Acquisition and
the Rights Issue, will not regard any other person(s) (whether or
not a recipient of this announcement) as its client(s) in relation
to the Acquisition or the Rights Issue and will not be responsible
to anyone other than the Company for providing the protections
afforded to its clients or for providing any advice in connection
with the Acquisition, the Rights Issue and/or any other matter,
transaction or arrangement referred to in this announcement.
Numis Securities Limited ("Numis") is authorised and regulated
in the United Kingdom by the FCA and is acting exclusively for the
Company and for no one else in connection with the Rights Issue,
will not regard any other person(s) (whether or not a recipient of
this announcement) as its client(s) in relation to the Rights Issue
and will not be responsible to anyone other than the Company for
providing the protections afforded to its clients or for providing
any advice in connection with the Rights Issue and/or any other
matter, transaction or arrangement referred to in this
announcement.
Apart from the responsibilities and liabilities, if any, which
may be imposed on Investec and Numis under FSMA or the regulatory
regime established thereunder, none of Investec, Numis or any of
their respective affiliates, directors, officers, employees, agents
or advisers accepts any responsibility or liability whatsoever for,
or makes any representation or warranty, express or implied, as to,
the contents of this announcement, including its accuracy,
fairness, sufficiency, completeness or verification, or for any
other statement made or purported to be made by it, or on its
behalf, in connection with the Company, the Acquisition or the
Rights Issue, whether written, oral or in a visual or electronic
form, and howsoever transmitted or made available, and nothing in
this announcement is, or shall be relied upon as, a promise or
representation in this respect, whether as to the past or future.
Each of Investec, Numis and their respective affiliates, directors,
officers, employees, agents and advisers accordingly disclaims to
the fullest extent permitted by law all and any responsibility and
liability whether arising in tort, contract or otherwise (save as
referred to above) which it might otherwise have in respect of this
announcement or any such statement.
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements may be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. Forward-looking
statements may and often do differ materially from actual results.
Any forward-looking statements reflect the Company's current view
with respect to future events and are subject to risks relating to
future events and other risks, uncertainties and assumptions
relating to the Group's business, results of operations, financial
position, liquidity, prospects, growth, strategies, integration of
the business organisations and achievement of anticipated
combination benefits in a timely manner. Forward-looking statements
speak only as of the date they are made.
Such forward-looking statements are based on beliefs,
expectations and assumptions of the Directors and other members of
senior management regarding ITE Group's present and future business
strategies, the timetable for integration of the Ascential
Exhibitions Business, the benefits to be derived from the
Acquisition and the environment in which ITE Group, the Ascential
Exhibitions Business and/or, following Completion, the Enlarged
Group will operate in the future. Although the Directors and other
members of senior management believe that these beliefs and
assumptions are reasonable, by their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that may or may not occur in the
future or are beyond the ITE Group Group's control. ITE Group, the
Ascential Exhibitions Business and/or, following Completion, the
Enlarged Group's actual operating results, financial condition,
dividend policy and the development of the industry in which they
operate, as well as the benefits and combination benefits actually
received, may differ materially from the impression created by the
forward-looking statements contained in this announcement. In
addition, even if the operating results, financial condition and
dividend policy of ITE Group, the Ascential Exhibitions Business
and/or, following Completion, the Enlarged Group, and the
development of the industry in which they operate, are consistent
with the forward-looking statements contained in this announcement,
those results or developments may not be indicative of results or
developments in subsequent periods. Important factors that could
cause these differences include, but are not limited to, general
economic and business conditions, industry trends, competition,
changes in government and other regulation, including in relation
to the environment, health and safety and taxation, labour
relations and work stoppages, changes in political and economic
stability and changes in business strategy or development plans,
difficulties encountered in integrating the two organisations
and/or achieving the anticipated combination benefits in a timely
manner and other risks.
In comparing the events organised by the ITE Group and the
Ascential Exhibitions Group, the Company regards the main
comparators to be the number of exhibitors, number of attendees,
floor space required and/or revenues generated by the event in
question. A "market-leading" or "must-attend" event would, in the
opinion of the Company, be one which was the leader across the most
relevant (to the event concerned) of these comparators.
You are advised to read this announcement and the Combined
Circular and Prospectus (if and when published) in their entirety
for a further discussion of the factors that could affect ITE Group
and/or the Enlarged Group's future performance. In light of these
risks, uncertainties and assumptions, the events described in the
forward-looking statements in this announcement may not occur.
Except as required by applicable laws and regulations, each of
ITE, Investec, Numis and their respective affiliates expressly
disclaims any obligation or undertaking to update, review or revise
any forward looking statement contained in this announcement
whether as a result of new information, future developments or
otherwise.
The person responsible for this announcement is Waterstone
Company Secretaries Ltd, Company Secretary of ITE Group.
[1] The financial information for the Ascential Exhibitions
Business has been extracted from the consolidated management
accounts of Ascential Events Limited and subsidiaries, after
removing results of events not being acquired, discontinued event
revenue and profit, certain corporate allocations and other pro
forma adjustments. The amounts are stated on a constant currency
basis.
[2] Based on pro forma 2017 uncalendarised EBITDA.
[3] Based on pro forma 2017 uncalendarised EBITDA
[4] The financial information for the Ascential Exhibitions
Business has been extracted from the consolidated management
accounts of Ascential Events Limited and subsidiaries, after
removing results of events not being acquired, discontinued event
revenue and profit, certain corporate allocations and other pro
forma adjustments. The amounts are stated on a constant currency
basis.
[5] Based on pro forma 2017 uncalendarised EBITDA.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGGURGAUPRPWC
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