Informa Completes Capital Recycling With Ascential Acquisition

By Jacob Cohen Donnelly July 24, 2024

Informa, the UK media and events company, announced Wednesday its $1.5 billion offer to acquire Ascential, owner of Cannes Lions and Money 20/20.

In the announcement, Informa’s CEO, Stephan A. Carter, said:

Informa is in the business of creating, nurturing and growing world class B2B brands. Lions and Money 20/20 are outstanding examples of such brands. Combined, we can expand them into more sectors, accelerate growth and take advantage of new opportunities.

According to Ascential’s FY 2023 financials, it generated $265.4 million in revenue with $72.5 million in EBITDA, a ~27% EBITDA margin. This would mean the deal traded at close to a 21x EBITDA multiple based on 2023’s numbers. However, as Carter explained on the earnings call:

These are world-class brands with a power and market position that is unique. They’re not an event. They’re the event and the event has long-term value. And that is what led us to recommending the offer to Ascential.

We’ve known for the last couple of years that the real value is in being the top brand. Buyers don’t just want to own events; they want to own the top events in their markets. Clearly, Informa believes Cannes Lions and Money 20/20 are examples of that.

Looking at it in more detail, the marketing portfolio generated the lion’s share of the revenue, generating $168.5 million in revenue with a 42.6% pre-corporate cost EBITDA margin, while the fintech portfolio, including Money 20/20, generated $97.7 million in revenue with a 35% pre-corporate cost EBITDA margin.

The marketing portfolio is growing faster with 22% revenue growth year-over-year compared to the fintech portfolio’s 1% growth.

What’s interesting about Ascential is that, while events are a core part of the business, they’re not everything. In 2023, 66% of revenue came from events, with 38% from sponsorships and 28% from delegates. The other 34% is from non-event sources, including 15% in subscriptions across a few of its platforms, 15% for award entry fees, and 4% in its advisory business.

While the deal still needs shareholder approval, Informa plans to create a new division called Informa Festivals under Informa Markets and Informa Connect. According to the announcement:

Informa intends to make Lions the centre-piece of a new business, Informa Festivals, designed to showcase the value of experience-led, festival brands – a fast growing area in the B2B events space. Informa already has a number of its own major experience led, festival brands such as the Monaco Yacht Show (Luxury), London Tech Week (Future Tech) and Black Hat (Cyber Security). Informa sees the opportunity to create significant value from further developing its own Festival brands, in combination with Lions’ expertise, and accelerating the broader experience-led transformation of its wider B2B portfolio.

The deal is expected to close in Q4 2024.

Capital recycling

But as the headline suggests, this Ascential deal is part of a bigger trend for Informa that started in 2022. Informa made the smart decision to sell high-valued data businesses to give capital back to investors affected by the pandemic. Additionally, Informa saw an opportunity to acquire underpriced events products.

And so, it made several deals in 2022:

In total, it walked away with ~$3 billion in capital. According to Informa, at the time, these brands generated approximately $257.2 million in revenue and were acquired for an average EV/EBITDA multiple of ~28x. Over the next two years, it made a number of acquisitions:

  • March 2023: Spends $940 million to acquire Tarsus.
  • May 2023: Acquires Winsight for $380 million with a $20 million earn-out.
  • July 2023: Acquires HIMSS Global Health Exhibition/Conference for sub-9x EV/EBITDA (actual price unknown).

During that time, it acquired Industry Dive for a total enterprise value of $525 million. Now we come to the Ascential deal.

According to Informa’s 1H financials, it will have acquired $771.6 million in revenue if the Ascential deal goes through, completing its capital recycling exercise. Additionally, it will have paid an approximately 11x EV/EBITDA multiple for these assets. In other words, it will generate more revenue and EBITDA than it did when it had those data businesses.

Informa found a misalignment in business valuation and decided to swap high-value data subscription dollars for more overall revenue. It’s unclear if Informa will continue making deals after Ascential. The big question, ultimately, is what will move the needle? The business projects to do $5 billion yearly revenue with over $1 billion in EBITDA. Would acquiring a $50 million event matter?