Ascential [LON:ASCL] was hoping to sell its trend forecasting unit WGSN for GBP 1bn earlier this year.
But the divestment has reportedly stalled because of disagreements over price and the GBP 865m market cap media business is now exploring new options including a full sale.
And with Ascential’s enterprise value at GBP 1.1bn – only slightly above the mooted valuation of WGSN – buyout possibilities are certainly worth investigating.
Shares in Ascential have more than halved over the last couple of years. This has put the company at a deep valuation discount to key peers. On a forward-looking basis, Ascential trades at a 2024 EV/EBITDA multiple of 7x, according to data provided by Fidessa* and compiled by FactSet. Key peers Informa [LON:INF] and RELX [LON:REL] are valued at 11x and 16x, respectively.
Precedent transactions in the sector have also been conducted at higher multiples. Hyve, a rival to Ascential in the events sector, was acquired by Providence Equity Partners and Searchlight Capital for GBP 524m at a valuation of 22.1x EBITDA earlier this year. The GBP 1.7bn buyout of business-to-business information provider Euromoney by private equity funds Astorg and Epiris was carried out at a valuation of 20x EBITDA in 2022.
Even if Ascential managed to achieve a buyout offer in the low teens, around 13x 2024 EBITDA, it could be valued at GBP 1.9bn or GBP 380 pence per share, according to predictive analytics from The Morning Flash.
That’s almost double its closing share price of GBP 198 pence yesterday (28 September).
One possible reason behind Ascential’s valuation discount is its disjointed structure. A strategic review earlier this year set in motion a break-up plan which should have helped unlock value for shareholders. Ascential’s board proposed the sale of WGSN and a spin off its Digital Commerce assets into an independent, publicly traded company listed in the United States. Ascential’s remaining events business would have remained listed in London.
Eight months following the announcement, none of those changes have been implemented. Ascential’s share price is not far off all-time lows. Management maintained that its plan was on track, according to comments in a half-year results statement published on 22 September. But key shareholders including asset managers Jupiter, Ameriprise and Blackrock are sitting on losses and likely to be losing patience, too.
That could pave the way for an opportunistic bid for the whole company.
A deal would give shareholders the opportunity to monetise their investment at a premium to where the stock currently trades. And a bidder would have the opportunity to break up the business away from the glare of public markets – potentially at a big profit.
Ascential has struggled to execute its break-up plan as a listed company, with chatter its WGSN sale talks have stalled. A period under private ownership might give the business more breathing room to complete its transformation.
by Saritha Dantu
*ION Analytics and Fidessa are ION Group companies
