TIDMFUTR
RNS Number : 6707I
Future PLC
16 August 2021
16 August 2021
This announcement contains inside information
Future plc
Acquisition of Dennis
Future plc (LSE: FUTR, "Future", the "Group"), the global
platform for specialist media, is pleased to announce the
acquisition of Dennis, a leading consumer media subscriptions
business, which includes trusted Wealth, Knowledge and B2B
technology specialist titles such as, Kiplinger, MoneyWeek, The
Week & IT Pro, from Exponent Private Equity LLP ("the Vendors",
or "Exponent").
The acquisition, which is expected to be materially earnings
enhancing, is for a purchase price of approximately GBP300m, funded
using the Group's existing debt facilities.
The titles being acquired by Future are: The Week UK / The Week
US, The Week Junior UK / The Week Junior US, MoneyWeek, Kiplinger,
Science & Nature, IT Pro, Computer Active, PC Pro, Minecraft
World, and Coach.
The four titles not being acquired by Future - Viz, Fortean
Times, Cyclist and Expert Reviews - will be retained by the
Vendors.
Strategic rationale
1. Scale the Group's 'Wealth' vertical
-- The acquisition's trusted brands including MoneyWeek and
Kiplinger provide a highly complementary and scale presence in this
vertical both in the US and UK, enhancing the Group's ability to
broaden its monetisation channels.
-- The Group will be able to leverage its technology platforms
for advertising and eCommerce and centres of excellence to the
acquired brands.
2. Further diversify the Group's revenue by materially
increasing the Group's recurring revenues through subscriptions
-- Subscriptions represent 75%(1) of Dennis' revenues, driving
stable, long-term customer retention.
-- Dennis' subscription conversion engine will strengthen the
capability across the wider group and add further expertise in
pricing and yield management.
-- Subscriptions provide additional data enrichment through
highly qualified first party data in both the US and UK.
3. Further extend the Group's reach in the North American market
-- Future's existing brands currently reach 1 in 3 people online in the US.
-- c.56% of revenue(1) from Dennis is generated in the US, bringing further geographic revenue diversification to the Group.
4. Deepen the Group's existing presence in the 'B2B Pro Technology' vertical
-- The acquisition of Dennis includes a number of smaller
specialist titles, including IT Pro, diversifying the Group's
proposition in the B2B Pro Technology segment while also scaling
the Group's lead generation capabilities.
5. Enhance the Group's 'Knowledge' vertical with high subscription rates and growth potential
-- As trusted brands with strong retention and growth rates, The
Week UK, The Week US, The Week Junior UK, The Week Junior US and
Science & Nature will add over 700,000 subscribers to the
Group.
-- The Group will continue to operate a one platform approach to
technology, which we believe will create opportunities for Dennis'
brands as we migrate to our platforms and operating model,
including eCommerce opportunities.
Financial highlights and transaction structure
Dennis demonstrated strong growth in its financial year to 31
December 2020, reporting revenue of GBP104.8m(1) , up 12% on 2019,
and adjusted EBITDA of GBP20.0m(1) , up 14% on 2019. This growth
has continued into 2021 with revenue growth of 16% in the twelve
months ended June 2021. Gross assets as at 30 June 2021 were
GBP210m.
The acquisition is expected to be materially earnings enhancing
in the first full year of ownership with ROIC expected to exceed
the Group's WACC within the first full year of ownership.
Expected cost synergies are GBP5m per annum, to be achieved by
FY2023. They represent 25% of Dennis' FY2020 EBITDA.
The purchase price of approximately GBP300m is to be satisfied
in cash on completion (expected on 1 October 2021), subject to
normal closing adjustments. Under the terms of the acquisition, the
Vendors have agreed to pay Future a minimum of GBP8m and a maximum
of GBP10m within 12 months of completion.
The acquisition is being funded via the Group's debt facility,
which was increased to GBP600m in July 2021 via an amend and extend
exercise. The amended facility, which remains at competitive market
rates, comprises:
-- a three year GBP400m RCF
-- a GBP200m Term Loan repayable in instalments commencing in March 2022 and ending in June 2023
The Group expects to rapidly de-lever below 1.5 times after
completion.
Completion of the acquisition is conditional upon, among other
things, expiration of the applicable waiting period under the U.S.
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR"). The
transaction is being effected through the acquisition of Broadleaf
Newco 2 Limited which will be the parent company of Dennis on
completion. If there are any reasons as to why the acquisition
cannot be completed as a matter of law by 1 November 2021, the
Vendors have the right to terminate the transaction at that time.
If this termination right is not enforced at that time, the
transaction is subject to a long-stop date of 30 June 2022.
Zillah Byng-Thorne, CEO of Future, said:
"I am delighted to announce the acquisition of a high-quality
portfolio of Dennis' trusted brands that will accelerate our
strategy, enhance our content capabilities and bring additional
geographical and vertical revenue diversification, whilst
materially increasing the proportion of recurring revenues across
the Group.
"The materially earnings enhancing acquisition is highly
complementary to our longstanding 'US first' mindset and provides
an attractive opportunity to scale our recently created 'Wealth'
vertical, whilst diversifying our presence in our 'Knowledge' and
'B2B Pro Technology' verticals.
"I look forward to welcoming our new colleagues to Future, and
to continuing the successful execution of our strategy to generate
long-term sustainable growth and attractive returns for our
shareholders."
James Tye, CEO of Dennis, said:
"In the three years that the business has been owned by
Exponent, Dennis has been on an incredible growth journey,
delivering double digit increases in subscription revenues, a
greatly increased US footprint; and significant bottom-line
increases. This is a testament to the talented team at Dennis who
have helped make all of this happen.
"We look forward to working with the team at Future to continue
growing the reach, influence and value of all our key brands and
businesses."
Presentation
A pre-recorded presentation and a live Q&A session for
analysts and investors will be held at 08.00 am (UK time) today at
https://us02web.zoom.us/j/85061907885
A copy of the presentation will be available on our website at
https://investor.futureplc.com/results-home/
A recording of the webcast will also be made available on our
website.
- End -
Enquiries
Future plc
Zillah Byng-Thorne, Chief Executive Officer +44 (0)1225 442244
Rachel Addison, Chief Financial Officer
Marion Le Bot, Head of Investor Relations +44(0)7775 641509
Numis (Sole Financial Adviser to Future) +44 (0) 20 7260 1000
Nick Westlake
Mark Lander
Alec Pratt
Hugo Rubinstein
Media
Headland (PR Adviser to Future)
Stephen Malthouse, Rob Walker, Charlie Twigg +44 (0) 20 3805 4822
Future@headlandconsultancy.com
FTI Consulting (PR Adviser to Dennis and Exponent)
Kit Dunford / Laura Ewart +44 (0)7717 417 038 / +44 (0)7711 387 085
exponent@fticonsulting.com
About Future
Future is a global platform business for specialist media with
diversified revenue streams. Its content reaches over 1 in 3 adults
online in both the UK and the US.
The Media division is high-growth with complementary revenue
streams including eCommerce for products and services, events, and
digital advertising (including advertising within newsletters). It
operates in a number of sectors including technology, games &
entertainment, music, home & gardens, sports, TV & film,
real life, women's lifestyle and B2B. Its brands include TechRadar,
PC Gamer, Tom's Guide, Android Central, Truly, Digital Camera
World, Homebuilding & Renovating Show, GamesRadar+, The
Photography Show, Top Ten Reviews, Marie Claire, Live Science,
Guitar World, MusicRadar, Space.com, What to Watch, GoCompare,
Gardening Etc, Adventure and Tom's Hardware.
The Magazine division focuses on publishing specialist content,
with a combined global circulation of over 3 million delivered
through more than 115 magazines, and 410 bookazines published a
year. The portfolio spans technology, games & entertainment,
sports, music, photography & design, homes & garden,
country lifestyle, TV & film and B2B. Its titles include
Country Life, Wallpaper, Woman & Home, Classic Rock, Decanter,
Guitar Player, FourFourTwo, Homebuilding & Renovating, Digital
Camera, Guitarist, How It Works, Total Film, What Hi-Fi? and Music
Week.
About Dennis
Dennis is a leading consumer media subscriptions business based
in London, New York and Washington DC. Operating across the Current
Affairs and Personal Finance verticals in the UK and US, the
portfolio is centred on The Week, The Week Junior, MoneyWeek and
Kiplinger brands.
Exponent recently separated Autovia, a market leading automotive
content and eCommerce platform,
from Dennis. Following the sale of Dennis to Future, Autovia
will remain as an Exponent backed company.
Dennis is led by its CEO, James Tye, who will remain with Dennis
following completion and as part of the Future Group.
Note
(1) Financial information is included on a carve-out basis and
reflects the assets to be acquired by Future. This information is
unaudited and based on management accounts. The underlying
financial information relating to the assets to be acquired was
audited in FY 2020 as part of the audit process of the parent
company Broadleaf Topco Group (consisting of the Dennis brands as
well as The Carve Out Titles and Autovia which are not within the
transaction perimeter).
Legal Entity Identifier (LEI) : 213800K2581YRLEXV353
Important notices
Important information relating to the sole financial advisor
Numis Securities Limited ("Numis"), which is authorised and
regulated by the Financial Conduct Authority in the United Kingdom,
is acting exclusively for Future as joint financial advisor and
corporate broker, and for no one else, in connection with the
acquisition and related matters and will not be responsible to
anyone other than Future for providing the protection offered to
clients of Numis or for providing advice in relation to the
acquisition, and related matters, the contents of this announcement
or any transaction, arrangement or other matter referred to in this
announcement.
Important information regarding forward-looking statements
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Forward-looking statements include statements relating to: (a)
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Neither the Company nor any of its Directors, officers or advisers
provides any representation, assurance or guarantee that the
occurrence of the events expressed or implied in any
forward-looking statements in this Announcement will actually
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END
ACQUVRURABUWAAR
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August 16, 2021 02:00 ET (06:00 GMT)
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