RNS Number : 9481F
Centaur Media PLC
22 June 2012

22 June 2012


Acquisition of Econsultancy for an initial consideration £12m


Centaur Media plc (LSE: CAU, "Group", "Centaur"), the business information and events group, has agreed to acquire E-consultancy.com Limited ("Econsultancy"), a leading digital marketing information provider, for an initial consideration of £12m. The acquisition is subject to shareholder approval.



·      Econsultancy is a leading digital and events-led information provider to the global digital marketing and e-commerce community in the UK, with a growing presence in the USA, Middle East, Asia and Australia

·      The acquisition is a key part of the strategy to transform the Group into a predominantly digital and events-led business

·      Initial consideration of £12m in cash, with deferred consideration of up to £38m due in 2016, based on EBITDA performance for the year ending December 2015

·      Expected to be materially earnings enhancing within the first full year

·      Econsultancy's revenues stem from subscriptions, events, training, professional qualifications and media  

·      Econsultancy has approximately 110,000 registered users and approximately 5,000 subscribers

·      Econsultancy's CEO and key executives will remain with the business following the acquisition

·      In the financial year to 31 December 2011, Econsultancy reported revenues of £6.6m (representing an increase of 50 per cent. on the prior period) and adjusted EBITDA of £1.1m

·      The deal complements Centaur's market-leading publications, events and digital services in the marketing, design and creative sectors


Geoff Wilmot, Centaur Chief Executive, said:


"The earnings enhancing acquisition of Econsultancy provides us with an exciting opportunity to acquire a leading information brand in a high growth sector with global potential which fits well with Centaur products including Marketing Week and New Media Age.


"Econsultancy is highly complementary with Centaur and gives us a prominent position in the rapidly growing digital marketing sector with the opportunity to scale internationally.


"We see considerable potential for collaborative growth through leveraging our existing position in marketing and the development of high value, paid-for information services."


There will be an analyst conference call at 10.45am; please contact Sarah Vines at College Hill on +44 (0)20 7457 2057 for details.





Geoff Wilmot, Chief Executive                                         
Mark Kerswell, Finance Director


+44 (0) 20 7970 4506

College Hill (PR adviser to Centaur)

Adrian Duffield/Malar Velaigam


            +44 (0) 20 7457 2020

Trillium Partners Limited (Financial adviser to Centaur)

Stephen Routledge/Andrew Zelouf


+44 (0) 20 3008 8375

Numis Securities Limited (Sponsor and broker to Centaur)

Lorna Tilbian/Chris Wilkinson/Nick Westlake


+44 (0) 20 7260 1000

Numis Securities Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting as Sponsor and broker to the Company and for no one else in connection with the Proposed Acquisition and will not be responsible to anyone other than the Company for providing the protections afforded to its customers or for providing advice in relation to the Proposed Acquisition or any other arrangements referred to herein.

Proposed acquisition of the entire issued share capital of E-consultancy.com Limited

1          Introduction and summary

The Board of Centaur Media plc ("Centaur" or the "Company") today announces that Centaur Communications Limited ("CCL"), a wholly owned subsidiary of Centaur, has conditionally agreed to purchase the entire issued share capital of E-consultancy.com Limited ("Econsultancy"). The consideration for the Proposed Acquisition, on a debt-free, cash-free basis, will comprise an initial payment of £12 million payable in cash on Completion and a deferred payment of up to £38 million calculated by reference to EBITDA earned by Econsultancy in the 12 months ending 31 December 2015 and payable in March 2016. Further details on the principal terms of the Proposed Acquisition are included in paragraph 5 of this announcement.

Due to its size, the Proposed Acquisition constitutes a class 1 transaction for the Company under the Listing Rules and therefore is conditional on Shareholder approval at a General Meeting. The General Meeting is expected to be held at the Company's offices at Wells Point, 79 Wells Street, London W1T 3QN at 10.00 a.m. on 9 July 2012.

This announcement provides further information including the background to, and reasons for, the Proposed Acquisition, and explains why the Board of Centaur (the "Board" or the "Directors") believes it to be in the best interests of the Company and Shareholders as a whole and accordingly why the Board unanimously recommends that Shareholders should vote in favour of the Resolution to be proposed at the General Meeting, as each member of the Board intends to do in respect of his or her own beneficial holding of Ordinary Shares.

Further information on the Proposed Acquisition and the notice convening the General Meeting will be included in a circular that is expected to be posted to Shareholders shortly.

2          Background to and reasons for the Proposed Acquisition

In June 2011, the Centaur Group initiated a comprehensive restructuring programme which resulted in the Centaur Group being structured into three main operating divisions - Business Publishing, Business Information and Exhibitions.

The key purpose of the Centaur Group's restructuring in June 2011 was to rationalise its decentralised business publishing operations into three market-facing groups within the Business Publishing Division, comprising the Legal and Financial group, the Marketing and Creative group and the Corporate Services group and to allow for the planned disposal of assets in certain niche markets.

In September 2011, at the time of the year end results announcement, the Company set out a clear strategy which included the following objectives: to build market leading positions in high growth markets in the UK and internationally; to increase the proportion of revenues generated from digital media, high value subscriptions and events, and reduce the relative dependency on print and advertising; to invest in high quality content and digital platforms and in major events that strengthen the Centaur Group's position across all its markets; and to leverage scale to deliver rapid growth in EBITDA margins and cash flow. The key performance measures of this strategy are to double revenues, double the proportion of digital format revenues and double the Company's EBITDA margin by the end of 2014.

The Directors believe that digital marketing is increasingly becoming an integral part of the mainstream marketing function of businesses around the world and this belief is supported by WPP and Jefferies estimates that global digital advertising spend will grow to $100.3 billion by the end of 2012, representing growth of 34 per cent. since 2010. In the US in particular, Forrester anticipates that digital marketing spend will continue to grow over the course of the next five years. As stated above, the Company plans to increase its exposure to digital marketing and to international, paid-for digital revenues. The Directors believe that Econsultancy offers an excellent fit with the Centaur Group's stated strategy.

3          Information on Econsultancy

Econsultancy is a digital and events-led information provider to the global digital marketing and e-commerce community. At the heart of Econsultancy's business is an extensive digital database of data, research and best practice content which can be leveraged to deliver high value paid-for information solutions for marketing and e-commerce professionals globally. Econsultancy is also one of the UK's leading providers of information, training and events in the digital marketing sector and has applied this model in the USA, Middle East, Asia and Australia, with the result that 20 per cent. of its revenues are currently generated in international markets.

Econsultancy's core business is to assist its customers to develop and apply their digital marketing skills. It does this through five major product and service offerings:

•           Subscriptions, offering a mixture of proprietary and aggregated third-party content in the form of data, research and best practice guides;

•           Events, offering forums, conferences, awards and networking sessions relating to digital marketing, which have been rolled out into multiple markets;

•           Training in digital skills, increasingly delivered as bespoke in-company training and through e-learning programmes;

•           Professional Qualifications, including the creation of the first MSc in Digital Marketing Communications in 2007 in partnership with the Manchester Metropolitan University Business School. This year Econsultancy will have around 250 students on its Masters courses and is planning to extend its qualifications model into key overseas markets; and

•           Media, offering (inter alia) advertising, job listing and sponsored survey opportunities across Econsultancy's online platforms.

Econsultancy's core digital information service currently attracts approximately 380,000 unique visitors per month. Of these, approximately 110,000 worldwide users have registered for additional free services and approximately 5,000 customers pay (by subscription) for enhanced access. Subscribers are either individuals or corporations and include Adobe, Cadbury, Chevrolet, Citi, Dell, Disney, HarperCollins, HSBC, IBM, IPC Media, Microsoft, Sky, Tesco, Visa and WPP.

Econsultancy is headquartered in London, where most of its 60 staff are located but it also has offices in New York, Singapore and Sydney. The business was founded in 1999 by its current CEO, Ashley Friedlein, and Matthew O'Riordan. Key members of Econsultancy's management team include Charlie Salter (Chief Operating Officer), Craig Hanna (Executive Vice President, North America), Peter Abraham (Executive Vice President, Europe, the Middle East, Africa and Asia), Linus Gregoriadis (Research Director) and Chris Lake (Director of Product Development), each of whom has been with the business for at least four years. Ashley Friedlein intends to remain with Econsultancy at least until the end of 2015.

Between 2009 and 2011 Econsultancy's revenues grew by 130 per cent., delivering growth both in the UK (89 per cent.) and internationally (1593 per cent.). In Econsultancy's most recent audited accounts, for the 12 months ended 31 December 2011, Econsultancy reported revenues of £6.6 million, representing an increase of 50 per cent. on the prior period, and adjusted EBITDA of £1.1 million, representing an adjusted EBITDA margin of 17 per cent., profit before tax of £0.6 million and gross assets of £3.3 million. Econsultancy's expansion into international markets has increased its operating costs and affected its margins. The Directors expect these margins to improve as the benefits of this international investment, including an expected increase in subscriptions and e-learning in the UK, US and Asia-Pacific regions, bear fruit.

The circular to Shareholders will contain additional financial information on Econsultancy, including audited financial information for the years ended 31 December 2009, 2010 and 2011, prepared in accordance with IFRS and the accounting policies of Centaur.

4          Strategic benefits of the Proposed Acquisition

The Directors believe that a combination of Econsultancy with Centaur's market leading publication brand, Marketing Week, will create opportunities to grow revenue further, strengthen both brands and improve Econsultancy's access to strategic, international marketing communities through the provision of marketing, editorial and event support by Marketing Week. The Directors also expect that the premium market access offered by Marketing Week, coupled with the development of Econsultancy's paid-for information portfolio, will increase the current conversion rate of regular users to paying subscribers. Econsultancy also has some overlap with Centaur's New Media Age title and Centaur intends to combine some resources within these brands following Completion.

The acquisition of Econsultancy is expected to accelerate Centaur's transformation into that of a predominantly digital information and events business and to strengthen Centaur's position as a leading information provider to the global marketing community. Notable anticipated benefits include:

•           Increased proportion of digital revenues: approximately 36 per cent. of Econsultancy revenues are currently delivered in digital format, which will serve to accelerate achievement of Centaur's key strategic objective of at least 50 per cent. digital format revenues by the end of 2014;

•           Increased revenues from paid content: Econsultancy generates over 20 per cent. of its revenues from subscriptions to its content and the Board believes this content offers significant further growth potential;

•           Revenue synergies: the Board believes that Econsultancy's revenue potential in the UK will be materially enhanced by virtue of the premium market access provided by Marketing Week;

•           International expansion: Econsultancy generates 20 per cent. of its revenues from overseas markets, which grew at a rate of 260 per cent. in the year ended 31 December 2011 and the Board believes that these markets offer the potential for Econsultancy to generate more revenues in aggregate than the UK market in the future. Furthermore, the Board intends to explore the scope for enhancing Centaur's existing portfolio by exploiting Econsultancy's presence in these overseas markets; and

•           Efficiencies: the Directors anticipate that efficiencies will be created through the sharing of services by Econsultancy and Centaur.

It is proposed that Econsultancy will form part of Centaur's Business Information division, but it will work closely with the Marketing and Creative publishing group within the Business Publishing division and with the Centaur Group's Exhibitions division, with the intention of establishing Econsultancy as the "digital marketing expert" for the wider marketing community, both in the UK and internationally.

5          Principal terms of and conditions to the Proposed Acquisition

Under the terms of the Share Purchase Agreement relating to the Acquisition, Centaur's wholly-owned subsidiary CCL has conditionally agreed to acquire the entire issued share capital of Econsultancy for the following Consideration:

·              £12 million (the "Initial Payment"), payable in cash from Centaur's existing bank facilities at Completion and subject to a possible adjustment following Completion by reference to the net working capital ("NWC") of Econsultancy at Completion as described below;

•           a further payment based upon future performance (the "Deferred Payment"), which will be calculated as a multiple of 7.5 times EBITDA earned by Econsultancy in the 12 months ending 31 December 2015, less the amount of the Initial Payment. The Deferred Payment which will not exceed £38 million will be satisfied in cash or, at the election of the Econsultancy Vendors, by the issue of unsecured loan notes which will bear interest at a rate of 1 per cent. above LIBOR; and

•           an amount equal to the NWC of Econsultancy at Completion subject to a cap of £500,000. If the NWC of Econsultancy at Completion is negative the Econsultancy Vendors will repay Centaur a sum equal to the shortfall.

Further details of the terms of the Share Purchase Agreement will be set out in the circular to Shareholders.

6          Financial effects of the Proposed Acquisition

An unaudited pro forma statement of the net assets of the Company illustrating the effect of the Proposed Acquisition on Centaur's financial results as at 31 December 2011 as if the Proposed Acquisition had been completed on that date, which has been prepared for illustrative purposes only, will be set out in the circular to Shareholders.

The Board of Centaur believes that the Proposed Acquisition will be materially earnings accretive in Econsultancy's first full year of Centaur ownership.

7          Information on Centaur

Centaur is one of the leading UK-based business information, publishing and events groups. It provides marketing and information solutions to buyers and sellers within several high value professional and commercial market communities. Centaur's focus is on digital solutions, supported by an extensive portfolio of events and, in certain sectors, market-leading print brands. Its main offices are located in London and most of its revenues and profits are derived from the United Kingdom.

Following a reorganisation in June 2011, Centaur is structured into three operating divisions:

•           Business Publishing, comprising Centaur's business publishing brands, including the associated sponsored events. The division is divided into three publishing groups: Legal & Financial (brands include The Lawyer and Money Marketing), Marketing & Creative (brands include Marketing Week and Creative Review) and Corporate Services (brands include Employee Benefits and The Engineer);

•           Business Information, comprising Perfect Information, a digital business that provides work flow solutions and global financial information across the corporate advisory sector, including investment banks, brokerage firms, consultancies, accounting and law firms; VB Research, a provider of financial news, data, research and analytics to corporations, finance professionals, lawyers and investors active in the global clean energy, security and defence markets; and The Profile Group, a digital provider of forward planning and contact information to media, public relations and marketing professionals; and

•           Exhibitions, comprising Centaur's trade show business and the housing market-focused Ascent publishing operations (the principal brand is Homebuilding & Renovating).

8          Current trading and future prospects of Centaur

On 18 May 2012, Centaur released the following interim management statement as an update on Centaur's trading since 1 January 2012 based on results for the 10 month period up to 30 April 2012 and with commentary on Centaur's trading up to 17 May 2012:

"Total digital revenues increased by 9 per cent. and now represent 31 per cent. of total revenues, compared to 28 per cent. for the same period last year. Total underlying revenues across the Group were 3 per cent. ahead of the same period last year, with underlying digital, print and events revenues up 7 per cent., down 3 per cent. and up 6 per cent. respectively. Despite the continuation of challenging trading conditions, the Group expects to report results in line with its expectations for the current financial year.

Across the Business Publishing division, the anticipated weakness in print advertising revenues principally related to the Marketing Week, Money Marketing and Fund Strategy titles. All other print titles and all digital titles reported satisfactory revenue growth. The Group continues to actively manage its portfolio and as planned has discontinued a number of low margin events and products within the division. Forward bookings are 10 per cent. ahead of the same period last year.

In Business Information, underlying revenues continued to show good rates of growth. The VBR and Profile acquisitions have been integrated and are performing in line with expectations. Deferred revenues are 64 per cent. ahead of the same period last year.

In Exhibitions, all events held during the year to date have reported growth in revenues. The key events that run in the last two months of the year, including Marketing Week Live, have forward bookings 20 per cent. ahead of the same time last year. Forward bookings for events that run in the next financial year are 32 per cent. ahead of the same period last year. The Group is also seeing a strong pipeline of new event launches.

As previously announced, the Group continues to actively manage its cost base. Initiatives over the period from 1 January 2012 to 30 June 2012 are expected to deliver in excess of £2 million of annualised cost savings but will result in estimated restructuring charges of £1.5 million. The Group will also report exceptional costs related to acquisitions and earn-out payments.

Operating cash flow in the 10 months to 30 April 2012 was £1 million ahead of the same period last year. Net debt at 30 June 2012 will reflect the impact of the Profile acquisition and will also be impacted by the cash costs of the restructuring initiatives. However, with continued focus on working capital across the Group, leverage is anticipated to be below one times EBITDA at 30 June 2012. Deferred revenues at 30 April 2012 were 12 per cent. ahead of the same time last year.

The Group traditionally generates in excess of 50 per cent. of annual EBITDA in the final quarter of its financial year. April results were in line with forecast and while the Business Publishing division continues to see some volatility in revenues, relative to last year the Group has improved visibility over the last two months trading."

9          Risk factors

The risk factors associated with the Proposed Acquisition and the operations of the Enlarged Group will be set out in the circular to Shareholders.

10        General Meeting

Completion of the Proposed Acquisition requires the approval of Shareholders voting in favour of the Resolution at the General Meeting. The circular to shareholders will include a notice convening the General Meeting, which is expected to be held at 10.00 a.m. on 9 July 2012 at the Company's offices at Wells Point, 79 Wells Street, London W1T 3QN. This notice contains a resolution to approve the Proposed Acquisition to be proposed at the General Meeting, the passing of which will require more than 50 per cent. of the votes cast voting in favour of the Resolution.   

11       Recommendation

The Board, which has been advised by Trillium Partners, considers the Proposed Acquisition and the passing of the Resolution to be in the best interests of the Company and the Shareholders as a whole. Accordingly, the Board unanimously recommends that the Shareholders vote in favour of the Resolution as they intend to do in respect of their beneficial holdings, amounting, in aggregate, to 1,424,756 Ordinary Shares. This represents 0.95 per cent. of the issued share capital of the Company at the date of this announcement. In providing its advice to the Board, Trillium Partners has taken into account the commercial assessment of the Board.


The following definitions apply to words and phrases used in this announcement except where the context requires otherwise:

"Adjusted EBITDA"

the non-GAAP metric used as a supplementary measure of performance and liquidity by the Eagle Group, calculated as profit before finance income, finance costs, tax, depreciation and amortisation and which excludes non-recurring costs (mainly due to relocation costs);


the board of directors of the Company;


Centaur Communications Limited, a wholly-owned subsidiary of Centaur;

"Centaur Group"

the Company and each of its subsidiaries and subsidiary undertakings from time to time;

"Company" or "Centaur"

Centaur Media plc;


completion of the Proposed Acquisition in accordance with its terms;


the total consideration to be paid by the Company to the Econsultancy Vendors under the terms of the Share Purchase Agreement;

"Deferred Payment"    

the deferred consideration payable to the Econsultancy Vendors under the Share Purchase Agreement being calculated by reference to the EBITDA of Econsultancy in the year ending 31 December 2015 and payable in March 2016;


the directors of the Company;


E-consultancy.com Limited;

"Econsultancy Group"   

Econsultancy and any of its subsidiaries as at the date of this announcement;

"Econsultancy Vendors"    

the current shareholders in Econsultancy;


earnings before interest, tax, depreciation and amortisation;

"Enlarged Group"         

the Centaur Group following the completion of the Proposed Acquisition;

"General Meeting"      

notice of the General Meeting to be set out in the circular to Shareholders;


the offered rate quoted in the London Inter-Bank Market on the first day of any applicable interest period for sterling deposits of an amount comparable to the relevant loan note for a period of one month, as reported in the Financial Times or derived from such other source as CCL may reasonably determine; provided that if at any time LIBOR cannot be ascertained, a substitute rate of interest as reasonably determined by CCL shall apply;

"Listing Rules"       

the rules and regulations made by the UK Listing Authority pursuant to section 74 of FSMA, as amended from time to time;

"Notice of General Meeting"

the notice of the General Meeting set out in the circular to be sent by the Company to Shareholders giving further details of the Proposed Acquisition;

"Ordinary Shares"     

ordinary shares of £0.10 each in the capital of the Company;

"Proposed Acquisition"

the proposed acquisition by the Company of the entire issued share capital of Econsultancy;


the resolution set out in the Notice of General Meeting to be proposed at the General Meeting;


holder(s) of Ordinary Shares;

"Share Purchase Agreement"

the conditional sale and purchase agreement dated 22 June 2012 between the Econsultancy Vendors (1), CCL (2) and the Company (3) relating to the sale and purchase of the entire issued share capital of Econsultancy;


a subsidiary, as that term is defined in section 1159 of the 2006 Act;

"Trillium Partners"         

Trillium Partners Limited;

"UK Listing Authority" 

the FSA acting in its capacity as the competent authority for the purposes of Part VI of FSMA; and

"United Kingdom" 

the United Kingdom of Great Britain and Northern Ireland.

All times referred to in this announcement are to London time, unless otherwise stated. 

This information is provided by RNS
The company news service from the London Stock Exchange