Ascential plc (LON:ASCL), has announced that it has entered into agreements, subject to shareholder approval, to sell its digital commerce business(1) to Omnicom Group Inc., and its product design business to Wind UK Bidco 3 Limited, a newly-formed company established by funds advised by Apax Partners LLP for a combined enterprise value of £1.4 billion and cash proceeds of £1.2 billion. Following completion of the Transactions, the Company intends to distribute approximately £850 million to Ascential shareholders.
Highlights
· Agreement to sell Digital Commerce to Omnicom for a total enterprise value of $900 million (approximately £741 million(2)). After customary closing adjustments, including earnout obligations assumed by Omnicom, expected proceeds from Omnicom are $835 million (approximately £688 million) and also taking account of certain early earnout settlements by Ascential of approximately $50 million and other customary closing adjustments, proceeds are expected to be approximately $775 million (approximately £638 million(2)).
· Agreement to sell WGSN to Bidco for a total enterprise value of up to £700 million which includes contingent consideration payable based on the ultimate return achieved by the Apax Funds on their investment. After customary closing adjustments (including in respect of approximately £61 million of deferred income), proceeds from Bidco are expected to be approximately £572 million payable on completion.
· The Transactions are expected to realise combined proceeds of approximately £1,210 million (2) representing 126% of Ascential’s market capitalisation immediately prior to this announcement, and 132% of Ascential’s market capitalisation immediately prior to 25 January 2023, when Ascential announced the conclusion of the Strategic Review. For the twelve-month period ended 30 June 2023, Digital Commerce and WGSN, in aggregate, represented 63% and 46% of the Ascential Group’s revenues and Adjusted EBITDA, respectively (before allocation of corporate costs).
· Following completion of the Transactions, Ascential expects to return approximately £850 million to shareholders. This represents 89% of Ascential’s market capitalisation immediately prior to this announcement (3), and 93% of Ascential’s market capitalisation immediately prior to 25 January 2023 (4), when Ascential announced the conclusion of its review of strategic options. The Board expects to implement the return of value to shareholders by way of a special dividend, although the quantum, timing and form of the return of value will remain at the discretion of the Board.
· The balance of the proceeds after return of value to shareholders will be used to pay taxes, transaction and separation costs incurred in relation to the Transactions of approximately £143 million and to repay drawn amounts under Ascential’s current debt facility. New debt facilities are expected to fund Ascential’s standalone Events business, which will target a Net Debt to Adjusted EBITDA ratio of 1-2x over the medium term.
· Following completion of the Transactions, the Ascential Group will be composed substantially of Ascential’s world-leading Events business, which is positioned for continued success as a high quality, independent UK-listed business. For the twelve-month period ended 30 June 2023, Events delivered revenues of £213 million and Adjusted EBITDA of £85 million(5) (before allocation of corporate costs).
· The Board of Ascential also reports today that the Board of Hudson MX has initiated a sale of the Hudson MX business, a US provider of SaaS media buying and media accounting solutions in which Ascential is a 36.5% shareholder, which the Board believes could unlock further shareholder value. Omnicom, the proposed acquirer of Digital Commerce, has confirmed its participation in the sale process for Hudson MX.
· As both the Digital Commerce Sale and the WGSN Sale are “Class 1” transactions for Ascential under the Listing Rules, the Transactions will be subject to approval by Ascential shareholders and the resolutions will be inter-conditional. A circular containing further details of the Transactions and a notice convening a general meeting of Ascential will be sent to shareholders in due course.
· The Transactions are also subject to the satisfaction of certain conditions, including in relation to regulatory matters.
· The Transactions are expected to complete by the end of Q1 2024.
Leadership
· On completion of the Digital Commerce Sale, Duncan Painter, currently Chief Executive Officer of Ascential, will join Omnicom and take on a new role as CEO of Flywheel Digital, a newly created practice area of Omnicom, which will operate the Digital Commerce business. Accordingly, Duncan Painter will step down from the Board of Ascential on completion of the Digital Commerce Sale.
· As previously announced, Philip Thomas, currently Chief Executive Officer of Ascential Intelligence and Events, will be appointed as Chief Executive Officer of Ascential and will join the Board of Ascential on completion.
· Scott Forbes and Mandy Gradden, currently Chairman and Chief Financial Officer of Ascential, respectively, will continue in their roles.
· Independent non-executive directors Joanne Harris and Charles Song will step down from the Board of Ascential on completion of the Digital Commerce Sale. All other Ascential independent non-executive directors will continue in their roles.
· The Ascential Board will continue to ensure that it has the right balance of skills and expertise to meet the needs of the Ascential Group as it enters its new strategic phase.
Scott Forbes, Chairman, Ascential plc, said:
“The Board firmly believes that the proposed sales of Digital Commerce and WGSN represent excellent value for shareholders, including the return of a significant portion of the combined proceeds. Furthermore, these actions are compelling in that they will enable us to achieve the objectives of the strategic review, addressing the distinct investment propositions of Ascential’s three businesses, while also better positioning each business to achieve their growth ambitions.“
Duncan Painter, CEO, Ascential plc, said:
“We are delighted that we have found excellent owners for both Digital Commerce and WGSN that will allow each business to flourish and take the next steps to pursue their own individual ambitions. Omnicom’s and Digital Commerce’s complementary technology and data platforms, together with their strong client relationships will be instrumental in accelerating the realisation of Digital Commerce’s strategy, and WGSN is also well set for its next chapter of growth under new ownership. Ascential’s continuing business with its world-leading Events brands remains well-positioned to succeed as a high quality, independent UK-listed business.“
Notes
(1) Rebranded as “Flywheel” from 24 October 2023
(2) Based on a GBP to USD exchange rate of 1.21 as at close of business on 27 October 2023.
(3) Based on a closing share price of 215.6 pence on 27 October 2023 and shares outstanding of 444,570,568.
(4) Based on a closing share price of 208.0 pence on 24 January 2023 and shares outstanding of 440,212,104.
(5) Excludes RWRC, disposed of in December 2022
J.P. Morgan is acting as Lead Financial Adviser, Joint Sponsor and Joint Corporate Broker to Ascential. Deutsche Numis is acting as Joint Financial Adviser, Joint Sponsor and Joint Corporate Broker to Ascential. Rothschild & Co is acting as Independent Financial Advisor to Ascential. Slaughter and May, Fried, Frank, Harris, Shriver & Jacobson LLP and Travers Smith LLP are acting as legal counsel to Ascential. Latham & Watkins (London) LLP is acting as legal counsel to J.P. Morgan and Deutsche Numis in their capacity as Joint Sponsors.
Analyst & Investor Briefing
Ascential will host a presentation for analysts and investors at 9.30am on 30 October 2023. This presentation will be webcast on www.ascential.com and a recording will also be available on-demand from our website in due course.
Conference Call Dial In
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