UBM plc announces the sale of PR Newswire to Cision for $841m and proposes to return GBP 245m to shareholders

LONDON, Dec. 15, 2015 /PRNewswire/ -- UBM plc, one of the world's leading B2B events organisers, today announces that it has reached agreement for the sale of PR Newswire to Cision, a business controlled by GTCR Canyon Holdings (Cayman), L.P., for $841m, comprising $810m in cash and $31m of preferred equity (on a fair value basis).  

Logo - http://photos.prnewswire.com/prnh/20151110/285637LOGO

The transaction is a significant step for UBM in executing its "Events First" strategy as it increases the Company's focus on the attractive, high growth global events sector.

Following completion of the transaction, GBP 245m is proposed to be returned to shareholders by way of a special dividend, with the remainder retained to provide greater financial capacity to drive the strategy through bolt-on acquisitions.

Transaction

• The total sale price of $841m represents excellent value for UBM's shareholders, being a c.11.2 times multiple of PR Newswire's 2014 adjusted earnings before interest, tax, depreciation and amortisation, while the cash value of $810m represents a c.10.8 times multiple
• Net cash proceeds received on completion are expected to be approximately GBP 498m after adjustments for transaction expenses, debt-like items, tax and a contribution of GBP 10m to UBM's pension scheme
• The agreement is subject to anti-trust clearance in the US. Completion is expected late in Q1 2016
• The transaction requires shareholder approval and a circular is expected to be posted to UBM shareholders shortly

Use of proceeds

• Shortly after completion, UBM proposes to return GBP 245m to shareholders by way of a special dividend which would be accompanied, subject to shareholder approval, by a share consolidation
• The retained net cash proceeds received on completion, of approximately GBP 253m, provides UBM with greater financial capacity to drive its "Events First" strategy through bolt-on acquisitions. UBM sees a good pipeline of opportunities

Impact on the Continuing Group

• The transaction will be dilutive to EPS initially. However this dilution will be partially mitigated by the proposed share consolidation accompanying the special dividend. Further, as the retained proceeds are reinvested in line with UBM's strict financial returns criteria the dilution will be progressively reduced
• UBM's existing progressive dividend policy targets 2 times cover through economic and biennial cycles. Following the disposal of PR Newswire, the Company intends to maintain this dividend policy on a dividend per share basis (following the special dividend and share consolidation) and to continue to focus on growing dividend cover towards its stated target
• UBM will maintain its published financial policy, with a target leverage range of 1.5x-2.0x net debt/EBITDA, retaining the flexibility to stretch for good reason on a 12-18 month horizon and a minimum leverage target of 1.0x
• Following the transaction, UBM expects to maintain its investment grade status with the credit rating agencies 
• PR Newswire will be treated as Held for Sale when UBM reports its full year results for 2015 on 25 February 2016
• The preferred equity will be held on the balance sheet at fair value ($31m).  The par value of $40m attracts an 8% PIK coupon and is expected to become payable on a realisation event at GTCR Canyon Holdings (Cayman), L.P.  
• Following the disposal of PR Newswire, the tax rate on adjusted Profit Before Tax for the Continuing Group is expected to be approximately 16%

On 10 November 2015, the Group released a trading update for the current financial year up to that date. There has been no change in UBM's assessment of trading since that time.

Tim Cobbold, Chief Executive of UBM plc, said:

"Today's announcement represents a significant step in the execution of UBM's "Events First" strategy, the objective of which is to become the world's leading focused B2B Events business. The Board is confident that this transaction realises excellent value for our shareholders.

Following the successful acquisition of Advanstar in 2014, the disposal of PR Newswire further increases our focus on the attractive, high growth and high margin events sector with more than 80% of UBM's continuing revenues generated in Events.

In addition, the retained sales proceeds will increase our capacity to invest in bolt-on acquisitions to strengthen the portfolio and grow the business faster, whilst maintaining appropriate financial discipline."

Investors and Analysts

A conference call will be held at 8.30am GMT. Slides and audio will be available through https://www.webcaster4.com/Webcast/Page/7/12303

Alternatively if you are likely to want to ask questions please dial-in into the call:
UK Toll-free                             0800 0323836
US/Canada Toll-free                (888) 203-7940
International dial-in                  (916) 582-3354          

Conference ID: 99561585
Slides will separately be available on the UBM plc website.

Contacts

UBM plc

Kate Postans Head of Investor Relations       kate.postans@ubm.com        +44 207 921 5023
and Corporate Communications

Brunswick
Jon Coles,                                                  ubm@brunswickgroup.com    +44 207 404 5959
Andy Rivett-Carnac, Craig Breheny

Evercore and J.P. Morgan Cazenove acted as financial advisers to UBM on this transaction and are acting as joint sponsors in relation to the related shareholder approval process.

1.    Information on PR Newswire, GTCR and Cision

Founded in 1954, PR Newswire is a global leader in press release distribution and related communications, products and services. PR Newswire's customers are primarily professionals working in marketing, public relations, corporate communications and investor relations roles at firms spanning Fortune 2000 multinationals, small businesses, public relations companies and government agencies worldwide. As at 30 June 2015, PR Newswire had gross assets of GBP 424.6m and, for the year ended 31 December 2014, generated an adjusted operating profit of GBP 44.8m.

GTCR is a Chicago based private equity firm with existing strategic investments in the broader global corporate communications marketplace. Cision, a business owned by GTCR Canyon Holdings (Cayman), L.P., is a leading global media intelligence company serving the complete workflow of today's PR and communication professionals. Cision also comprises the Gorkana Group, PRWeb, Help a Reporter Out (HARO) and iContact brands. Headquartered in Chicago, Cision has over 100,000 customers worldwide and maintains offices in Canada, U.K., France, Germany, Portugal, Sweden, Finland and China.

2.    Further terms of the transaction

The aggregate consideration (on a debt and cash free basis) will be $841m. The sum is subject to customary adjustments relating to the amount of working capital at completion.

On completion, UBM will receive a par value amount of $40m of preferred equity in Buyer Parent, the holding company for Cision, which will carry a PIK coupon of 8% per annum, compounded quarterly. This par value amount plus accrued interest on the preferred equity is expected to become payable on Buyer Parent completing a realisation event. On completion of the disposal of PR Newswire, accounting treatment requires the preferred equity to be held on the UBM balance sheet at fair value ($31m). The preferred equity is transferable subject to certain restrictions. UBM's current intention is to retain these securities. If there is an IPO of Buyer Parent, the preferred equity units will convert into common stock of the continuing corporation.

Completion of the transaction is subject to, inter alia, receipt of clearance from the US antitrust authorities or expiration of the applicable waiting period. Completion of the sale of the entity conducting the PR Newswire business in China (approximately $4m of consideration) is conditional upon receipts of certain regulatory approvals in China, but such approvals will not delay completion in respect of the remainder of PR Newswire.

UBM and the Buyer have entered into certain termination fee arrangements in relation to the transaction. In the event that the Disposal Agreement is terminated under certain circumstances, the Buyer is required to pay to UBM a fee of $42.5m, representing 5% of the $850m overall principal consideration. Certain funds controlled by GTCR have provided a guarantee of the payment of this fee by the Buyer.

In the event that the Disposal Agreement is terminated because UBM's shareholders do not approve the transaction, UBM will be required to pay to the Buyer a termination fee of $31.65m, representing 1% of UBM's market capitalisation (based on the closing share price on 14 December 2015).

Further information relating to the transaction will be provided in the circular to be posted to UBM shareholders.

3.    Other Information

The Board has decided that GBP 10m of the proceeds will be used to accelerate the reduction of UBM's gross pension fund deficit, which at 30 June 2015 was GBP 42.9m. 

In accordance with the UK Listing Rules, due to the size of the transaction relative to the size of UBM, the sale of PR Newswire is subject to approval by a majority of shareholder votes cast at the general meeting, which is expected to take place in January 2016. Shareholders will also be asked to approve a sub-division and consolidation of the share capital of the Company which will occur following the payment of the special dividend. This share consolidation is intended, as far as possible, to maintain comparability of the Company's share price before and after the payment of the special dividend. The share consolidation will require approval by at least two thirds of the votes cast at the general meeting.

There are not expected to be any changes to the UBM plc Board as a result of the disposal. There are no senior management or employees in PR Newswire that are key to the operation of UBM's remaining businesses.

For the purposes of this announcement numbers have been translated from US dollars into Sterling at the rate of $1.5120 per pound being the rate at 12:00 noon on 14 December 2015. 

4.    Definitions

5.    Important notice

This announcement has been issued by, and is the sole responsibility of, UBM plc ("UBM"). No representation or warranty, express or implied, is or will be made by, or in relation to, and no responsibility or liability is or will be accepted by any advisor to UBM or by any of their affiliates or agents as to or in relation to the accuracy or completeness of this announcement or any other written or oral information made available to or publicly available to any interested party or its advisers, and any responsibility or liability therefore is expressly disclaimed.

Evercore Partners International LLP ("Evercore"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for UBM as joint financial adviser and joint sponsor and for no one else in connection with the transaction, the content of this announcement and other matters described in this announcement and will not be responsible to anyone other than UBM for providing the protections afforded to clients of Evercore, nor for providing advice to any other person in relation to the transaction, the content of this announcement or any other matters described in this announcement.

J.P. Morgan Limited (which conducts its UK investment banking business as J.P. Morgan Cazenove) ("J.P. Morgan Cazenove"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for UBM as joint financial adviser, joint sponsor and joint corporate broker and for no one else in connection with the transaction, the content of this announcement and other matters described in this announcement and will not be responsible to anyone other than UBM for providing the protections afforded to clients of J.P. Morgan Cazenove, nor for providing advice to any other person in relation to the transaction, the content of this announcement or any other matters described in this announcement.

Save for the responsibilities and liabilities, if any, of Evercore or J.P. Morgan Cazenove under the Financial Services and Markets Act 2000, as amended, or the regulatory regime established thereunder, Evercore and J.P. Morgan Cazenove assume no responsibility whatsoever and make no representations or warranties, express or implied, in relation to the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by UBM, or on UBM's behalf, or by Evercore or J.P. Morgan Cazenove or on Evercore's or J.P. Morgan Cazenove's behalf and nothing contained in this announcement is, or shall be, relied on as a promise or representation in this respect, whether as to the past or the future, in connection with UBM or the transaction. Each of Evercore and J.P. Morgan Cazenove disclaims to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise which it might otherwise be found to have in respect of this announcement or any such statement.

The contents of this announcement do not constitute or form part of an offer of or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for any securities for sale in any jurisdiction nor shall they (or any part of them) or the fact of their distribution form the basis of, or be relied upon in connection with, or act as an inducement to enter into, any contract or commitment to do so.

A copy of the Circular will be available on UBM's website at www.ubm.com. Neither the content of UBM's website nor any website accessible by hyperlinks on UBM's website is incorporated in, or forms part of, this announcement. The Circular will give further details of the transaction.

Forward looking statements

This announcement may include certain forward-looking statements, beliefs or opinions, including statements with respect to UBM's business, financial condition and results of operations. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other various or comparable terminology. These statements are made by the UBM directors in good faith based on the information available to them at the date of this announcement and reflect the UBM directors' beliefs and expectations. By their nature these statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements.

No representation or warranty is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. Forward-looking statements speak only as at the date of this announcement and UBM and its advisers expressly disclaim any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this announcement. No statement in the announcement is intended to be, or intended to be construed as, a profit forecast or profit estimate and no statement in the announcement should be interpreted to mean that earnings per UBM share for the current or future financial years will necessarily match or exceed the historical earnings per UBM share. As a result, you are cautioned not to place any undue reliance on such forward-looking statements.

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments.