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magazineTarsus goes big in the US
Events company Tarsus (TRS) looks interesting heading into a traditionally stronger ‘odd’ year in 2017 and after agreeing (5 Dec) the biggest takeover in its history with the $57m acquisition of US business travel orientated peer Connect Meetings.
The biennial bias to the £297m market cap’s results reflects the fact its two biggest events, the Dubai Air Show and Labelexpo, both fall in odd years. House broker Investec expects the Connect deal to add 6% to earnings over the next two years.
Against this backdrop a blended price to earnings average for 2017 and 2018 (to smooth out the odd-even disparity) of 12.5 is undemanding.
Tarsus is paying an initial $44m for 80.1% of Connect with a further $12m based on a number of conditions. It is funding the acquisition through a £24m share placing and £13m of debt.
Numis analyst Gareth Davies says: ‘All in, this looks a very sensible deal consistent with Tarsus stated strategy, the implied 2016 deal multiple of 8.75x looks reasonable.’
Tarsus management see four key attractions to the transaction. It increases exposure to the US economy; it addresses markets in transition; the business has a strong financial track record; and there are opportunities to launch events in new territories. (TS)
Buy at 264p. Broker Numis has a price target of 350p.
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