The break-up of EMAP, one of the UK’s foremost media players, has been a drawn-out affair but few expected the development we got. Just as the media world was heading off for its Christmas break, the final piece of the EMAP empire, the business-to-business and events division, was sold to Guardian Media Group and private equity company Apax Partners for £1bn.
The deal came as a surprise because on December 7, as EMAP sold its consumer magazine and radio businesses to German group H Bauer, it had announced that it planned to keep the B2B division. At the time, it claimed that none of the bids it had received had been substantial enough to tempt it to sell.
GMG and Apax – operating under the name Eden Bidco – are reported to have gone back to the EMAP board with an “improved offer”, which persuaded it to perform the U-turn and signalled the end of EMAP.
City analysts believe it was the market’s distinctly underwhelmed reaction to EMAP’s decision to retain the B2B division that prompted the change in strategy. It was felt that as a standalone division it lacked scale and had no real potential for organic growth.
It is not yet clear what the pair intend to do with the B2B division, which was seen as the jewel in the EMAP crown and includes a variety of titles such as Broadcast, Nursing Times and Retail Week. Eden declines to comment on its plans or reveal the equity split ahead of the deal being approved. Indeed, the deal is conditional on the consumer business acquisition, which is expected to be approved at an EMAP shareholders Extraordinary General Meeting on January 15, going ahead.
Apax’s interest in EMAP is clear. It backed a £275m management buyout of the B2B magazine group, Incisive Media, which has magazines across the finance, IT, accountancy and legal sectors. Since the deal in December 2006, Incisive has been busy snapping up rival companies, including financial magazine group MSM International, and is now three times the size it was in November 2006.
Alex DeGroote, media analyst at Panmure Gordon, points out that Incisive has no overlap with EMAP, which covers media, healthcare and public sector, retail, automotive and construction, meaning the two could merge creating a “reasonable sized player in the B2B magazine market”. He suggests that its objective would be to go for a flotation over the next three years.
But, he adds, GMG is obviously part of the deal for a reason and it is understood that it plans to be actively involved in the partnership. The company, which is owned by the Scott Trust, has made clear its desire to diversify away its core interests to ensure that it protects the editorial independence of The Guardian. Last year, it sold 49.9% of Trader Media Group, which owns 70 titles including Auto Trader, to Apax to reduce its reliance on classified advertising.
The sale gave GMG funds to invest in non-traditional areas and EMAP is its first deal. Industry speculation suggests that EMAP’s media titles, including Broadcast and Screen International, could be integrated into GMG. It is also thought to be interested in the events division, which includes the Cannes Lions International Advertising Festival.
With the fate of EMAP now sealed, the industry will be watching to see whether the deal is the start of a long-term future for Eden in B2B or just a diversion for GMG as it seeks new revenue streams.