Cash approach for Informa as merger talks end with UBM

United Business Media (UBM) announced the breakdown of merger talks with Informa last night, as Informa put out a statement confirming an approach from a third party offering cash.

Sources close to UBM say negotiations on the all-share deal that would have created a global group worth £3.1bn were terminated yesterday because Informa's rising share price made the nil-premium deal uneconomic for UBM shareholders. Informa's stock was up 5.2 per cent yesterday alone, taking it to 470p compared with 386p when discussions were first made public last week.

"The board of UBM has been unable to agree terms with Informa that would be in the best interests of UBM shareholders," said a statement from the company.

But Informa stressed that discussions had been at an early stage only and no agreement on terms had been reached. "The company has received a further approach from a third party that may or may not lead to a takeover offer in cash being made for the company," a statement confirmed.

The danger was always that UBM's advances, capitalising on investor wariness over acquisition debts and a gently sliding share price, could prompt other suitors.

Informa released no details beyond the fact that the new approach may or may not lead to a takeover offer, but the group has been the subject of private equity interest before. Springer made a bid about 18 months ago, and Apax owns Incisive and Emap's business-to-business arm, which is run by David Gilbertson, who used to run Informa.

UBM, which publishes a range of titles including Property Week and Travel Trade Gazette, is also a major exhibition organiser with a growing business in Asia. Informa, which is the world's largest conference group, with publishing assets including Lloyd's List, was seen as a good fit with UBM's strategy to establish itself as a global, multi-platform business information provider.

UBM says it will continue its growth strategy, within requirements that acquisitions deliver 8 per cent post-tax returns in the first year. In 2007, revenues grew 8.5 per cent to £802m and pre-tax profits by 14 per cent to £129m. Since 2005, earnings per share have shot up by 80 per cent.

The talks between UBM and Informa, and any future deal involving Informa, is the latest in a growing trend towards consolidation in the sector. Taylor Nelson Sofres, the market research group, announced plans to merge with GfK, its German rival, earlier this month, and the advertising giant WPP is trying to scupper the deal and take over the UK company.