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Magazine and website publisher Future plc has agreed to an offer from GoCo Group plc to buy its subsidiary Gocompare.com, a financial services comparison website, for £594 million in a cash and shares takeover. Both the companies have announced their consent on 25 November.
GoCo’s shareholders will be the owners of roughly 19 per cent stake in the new entity. As per the terms of the new deal, the shareholders of the GoCo Group plc (LON:GOCO) will be entitled to receive 33 pence in cash and 0.052497 new Future shares, which will make GoCo share value 136 pence. The terms represent a premium of around 23.6 per cent per share of GoCo on the basis of a closing price of 110.0 pence per share.
Below are the details of the voting as suggested by the board to the shareholders:
- Sir Peter Wood, the largest shareholder and non-executive chairman of GoCo, has voted in favour of the deal in an irrevocable undertaking, representing 125,058,569 shares equivalent to 29.65 per cent of the firm’s issued share capital.
- The other independent directors have voted in favour of the deal in respect of 1,375,445 shares representing 0.33 per cent of its share capital.
- An average of 89,415 shares, accounting for 0.02 per cent of share capital, has received an undertaking from Future CEO Zillah Byng-Thorne.
- A letter of intent has been received from Marlborough Special Situations Fund, in respect of 15,000,000 shares of GoCo, accounting for 3.56 per cent share capital.
Therefore, a total of 141,523,429 shares of GoCo, accounting for 33.56 per cent of its share capital, has been received by Future in the form of a letter of intent and an irrevocable undertaking.
What does the acquisition mean for Sir Peter Wood and Future Group?
Sir Peter Wood, the largest shareholder of GoCompare, is the owner of almost 30 per cent of the company’s stake which is worth £170 million. With a payout of £41 million as a part of the cash element, Wood will make it to the list of top five shareholders in Future with a stake of 5.5 per cent. Wood’s net worth is £790 million and will be further strengthened because of the deal. As per the Sunday Times-Rich List, Wood is at the 179th position in the UK under the category of wealthiest persons.
Future’s side of deal
Magazine publisher Future has a market value of £1.9 billion and is the owner of titles such as Country Life, Marie Claire and Metal Hammer. The acquisition will help the group move further into a digital drive. After the completion of the deal, Future has identified an annual cost savings of £10 million, which is expected in Q1 2021.
(Source: London Stock Exchange RNS Report)
Future plc’s financials
Apart from announcing the recommended combinations of acquisition, the group also released its yearly report for the 52-weeks ending 30 September. The results displayed exceptional performance, much ahead of the Board’s expectations.
The revenue increased by 53 per cent to £339.6 million as a result of the acquisitions and organic growth. The group also witnessed an organic revenue growth of 6 per cent, driven by a diversified strategy in combating the impact of Covid-19.
The adjusted operating profit and adjusted diluted EPS surged 79 per cent and 57 per cent to £93.4 million and 74.7 pence, respectively. The performance saw a rise in the adjusted free cash flow of £96.0 million (2019: £53.7 million).
The 43 per cent decline in event cancellations was offset by strong growth in media, ecommerce, and digital advertising divisions by 23, 58, and 15 per cent respectively. The magazine division’s revenue declined by 29 per cent.
Stock performance
The shares of Future dropped 64 pence or 3 per cent to £19 on 25 November after the announcement of the acquisition.
The stocks of Future plc were trading at GBX 1,656.00 on 26 November at 9:29 AM. The value was above the last day’s closing price of GBX 1,634.00 by 1.10 per cent. The firm has a total Mcap of £1,634.00 million. On a year-to-date basis, the company recorded a positive return on price of 11.76 per cent.
Update from GoCo
GoCo offers online services to its customers through its website, helping them to compare financial products. It was founded in 2007 and has its headquarters in the UK.
The revenue of the group rose by 13 per cent to £131 million for the nine months period ending 30 September, because of exceptional growth in AutoSave. The net debt reduced because of the business model, which resulted in high cash generation.
Stock performance
After the announcement of the acquisition, the shares of GoCo surged 20 pence, or 18 per cent, to 130 pence. On 26 November, the company shares were trading at GBX 119.40 around 10:07 AM, up by 2.58 per cent as compared to the previous day’s closing price of GBX 116.40.
