Informa In Talks to buy Springer Science

LONDON (Reuters) – British media company Informa (INF.L) said it was in talks to buy Springer Science and Business Media, reigniting hope among Springer’s private equity owners they can finally offload the debt-ridden business.

Private equity firms Candover (CDI.L) and Cinven have been peddling the German academic publisher since early this year, initially giving it a valuation of around 1 billion euros ($1.49 billion).

Informa, which organises conferences and exhibitions and owns specialist publishers such as Routledge and Taylor & Francis, said it expected any takeover to generate significant savings thanks to cost cuts.

Shares in Informa were down 6 percent at 293.4 pence by 0844 GMT, valuing the company at just over 1.7 billion pounds ($2.81 billion) and highlighting market anxiety about deal financing. 

“We can see why this deal could make sense. However, we would be wary of the group overstretching itself financially and suspect investors may be reluctant to provide further funding,” Altium Securities analysts said in a note.

Analysts expected Informa to need to raise capital, with a Citi research note anticipating a capital increase of between 1 billion and 1.5 billion pounds, up to 6 times the amount the firm raised in May to cut debt.

Informa’s move on Springer is something of a role reversal, as Informa in 2006 rejected a 2.7 billion pound ($4.5 billion) takeover bid by Springer.


Springer’s owners had been looking to land 500 million euros ($745.4 million) for up to 49 percent of the business, but initial offers came in closer to 400 million euros, as suitors worried about refinancing a heavy debt burden.

Springer was formed in 2003 when Candover and Cinven merged BertelsmannSpringer with Kluwer Academic Publishing.

The two private equity firms then took advantage of hot debt markets to load the company up with debt in 2004, 2006 and 2007 and pay themselves large dividends.

They more than trebled Springer’s borrowings to 3.08 billion euros, leaving any potential buyer with a legacy of debt in need of refinancing.

Springer asked for new bids in mid-July from bidders including TPG, EQT and a consortium of Carlyle and Providence, before shifting its sights to a full sale of the company last month. [ID:nLE310487]

Apax Partners, which did not make a second-round bid, has remained in talks with the company for a possible deal.

“Informa has been given access to due diligence materials to enable it to be in a position to make a formal proposal to shareholders,” Informa said in a statement on Tuesday. “There can be no certainty agreement will be reached.”

By Simon Meads and Paul Hoskins
(Editing by David Cowell) ($1=.6045 Pound) ($1=.6708 Euro)