B2B Penton sold by PE owners to Informa plc in $1.56 billion deal
The present ownership of the company was established when MidOcean Partners and Wasserstein & Co. combined Prism Business Media with Penton Media in 2006
There is a basic rule of private equity owned media companies: at some point the PE will want to sell. The standard time is around five years. Maybe like the old line about guests and fish – maybe B2Bs, like fish, begin to smell after five years.
But MidOcean Partners and Wasserstein & Co. have been co-owners of the B2B media company Penton for a decade now. But that is about to change.
Today it was announced that the UK media company Informa plc has bought Penton for $1.56 billion (£1.18 billion). The deal is expected to be closed by November.
Penton has moved from a mainly B2B print magazine company into an events and information company, similarly positioned as its new owner.
As those with long memories might know, the last time a UK company bought a leading US B2B company it didn’t turn out so well. But times are certainly different, and with the emphasis on events the results may be different.
Informa Exhibitions has several recognizable event brands including World Of Concrete. If you are not familiar with the show don’t laugh, it’s a big show, one I used to attend annually in my construction publishing days.
“I think we’ve been very consistent that we want to grow in exhibitions and trade shows, business intelligence and information services … we see the natural next rotation step for growth as being the United States of America,” Informa CEO Stephen Carter told Reuters.
Penton’s markets include agriculture, transportation,natural products and food, design and manufacturing and infrastructure. Its products include magazines and events in those area, with the Natural Products East/West Expo being one of the shows I used to regularly attend, and Supermarket News and Aviation Week (which it bought from McGraw-Hill in 2013) being some of its more familiar magazine titles.
It’s hard to say whether this deal will work out well for the Penton folk. The acquisition makes the US division a very large part of the company, with Bloomberg reporting that Informa will generate less than 10 percent of its revenue from the UK after the Penton acquisition. Also, the deal will be financed through new debt and equity, meaning that there needs to be profits to cover the added costs.
Here is the announcement of the deal:
NEW YORK, NY – September 15, 2016 – MidOcean Partners, a premier middle market private equity firm, and Wasserstein & Co. , a leading independent private equity and investment firm, today announced that they have entered into a definitive agreement to sell Penton, an innovative professional information services company, to Informa plc for $1.56 billion. The consideration will consist of $1.46 billion of cash (plus adjustments) and $100 million of Informa stock.
Under MidOcean and Wasserstein ownership, Penton has been significantly transformed from predominantly a print business into a preeminent professional information services company. Penton has successfully completed 13 acquisitions, creating scaled positions in growth-oriented sectors—including agriculture, transportation, natural products/food, infrastructure, and industrial design/manufacturing sectors. Today, Penton has seven of the top 250 largest trade shows in the U.S., which have helped drive an event revenue CAGR of over 20% over the last four years. Additional significant investments have been made to create an industry leading team that has built a state of the art digital platform, launched numerous SaaS products and built a scaled and fast- growing digital content marketing services business.
“We are very pleased by the transformation we have helped Penton achieve. The business has successfully transitioned from a traditional business-to-business publisher into a premier professional information services business over the last few years,” said Anup Bagaria, Co-Managing Partner of Wasserstein and Co-Chairman of Penton, and Michael Struble, Partner of Wasserstein and Director of Penton. “The management team has done an excellent job establishing scaled, leadership positions in Penton’s core verticals. Through continuous improvement of its core offerings, new product launches and strategic M&A, Penton has grown impressively in recent years and positioned itself to accelerate growth in the years to come.”
Barrett Gilmer, Managing Director of MidOcean and Co-Chairman of Penton, said, “We are incredibly proud of our partnership with Penton and the Company’s success under CEO David Kieselstein. This investment exemplifies the value we bring to our portfolio companies by working closely with management teams to identify attractive areas for expansion, enhance operations and drive growth. In this case, under David’s leadership, and in particular over the last four years, Penton achieved a dramatic shift in its business mix, completed a number of highly strategic acquisitions and nearly doubled EBITDA from $77 million to $140 million. The entire Penton team played a role in this transformation and we wish them continued success as part of the Informa team.”
“MidOcean and Wasserstein are seasoned, hands-on investors and have been invaluable partners in supporting Penton and allowing us to execute on our strategy,” said David Kieselstein, CEO of Penton. “Their strategic insight, resources, flexibility and experience in the media services sector have been essential to our transformation by enabling our organic growth through new investment initiatives and sourcing and coordinating multiple accretive acquisitions.”
The transaction, which is subject to approval by Informa shareholders and customary regulatory and closing conditions, is expected to close in the fourth quarter of 2016.
Kirkland & Ellis LLP served as legal advisor to Penton and MidOcean. Jones Day served as legal advisor to Wasserstein.