FACTBOX-Informa takeover of Springer risky but appealing

LONDON, Nov 24 (Reuters) - Analysts believe Informa (INF.L) will need another, much bigger equity injection to fund any buy of Springer Science and Business Media but a tie-up could create a global giant. [ID:nGEE5AN0BD]

Following are analysts' reactions to the British company's interest in Germany's Springer:

CITI

"The issue here is the significant amount of debt that Informa would have to take on from Springer. On a pro-forma basis, if the group were 3x levered (net debt/EBITDA), it would mean Informa would need to raise 1 bn-1.5 bn pounds in equity (55 pct to 85 pct its current market cap).

"While we await further details on price/funding and uncertainty could continue to drag on the shares, Informa seems confident that the deal will generate value for shareholders and improve the group structure.

"We agree that strategically this would make sense and would weight the business more towards the more resilient academic publishing business ... We rate Informa 'Buy/High Risk'."

NUMIS SECURITIES

"We have long seen logic in an Informa/Springer combination ... Academic & Scientific publishing is one of the most resilient revenue streams in the sector with good opportunities for cost synergies.

"Whilst we acknowledge that the group would have to undertake a considerable rights issue, we are highly supportive of the acquisition and believe the enlarged group would be a high quality global leader in the sector."

PANMURE GORDON & CO

"The market's first order reaction is likely to be trepidation for two reasons: 1) Informa itself has long been seen as a bid target, and this is not the case if it goes ahead with an offer for SSBM; 2) Any such offer would be accompanied with another equity fund raising, soon after the rights issue.

"There are obvious synergy opportunities here, which is the route to any value creation."

SINGER

"While the upside on cost savings is mouth-watering in a low growth environment such a deal would take some significant work on structure and pose questions for the vendors and Informa shareholders. SSBM is a highly leveraged business (c8x ND/EBITDA) which would need substantial fresh equity to bring it down to Informa levels.

"Are Informa shareholders ready to stump up cash to buy out a private equity firm with few routes forward? Potentially we think yes. The vendors have few options and need to refinance the business giving Informa the upper hand in negotiations."

UBS

"Overall, we would see the potential deal as a strategic and financial positive, given the attractive price, synergy potential and earnings upgrades, though there may be a negative reaction initially given concerns over Informa increasing gearing and uncertainty over arranging financing.

"Informa trades on 10x 2010 forecast earnings - a discount to the historic range of c15x, and we believe offers earnings upside from M&A. We would see any weakness in the share price today as good buying opportunity."

(Reporting by Paul Hoskins; Editing by David Cowell) ((paul.hoskins@reuters.com; +44 20 7542 5331; Reuters Messaging: paul.hoskins.reuters.com@reuters.net))