UBM (UBM) 885.5p

Gain to date: 23.6%

Original entry price: Buy at 716.5p, 11 May 2017

We were clearly not the only ones who reckoned UBM’s (UBM) refined focus on the events industry made it an attractive proposition. Rival Informa (INF) has swooped (17 Jan) with a £9bn takeover offer.

It’s time to take profits on UBM, cashing in a handsome 23.6% gain. We’re getting out now as the market thinks Informa is overpaying for UBM. We also don’t believe there will be a counter bid.

The combined entity is expected to be 65.5% owned by Informa shareholders and 34.5% owned by UBM shareholders. The proposed transaction will see UBM shareholders receive 1.083 Informa shares plus 163p in cash, amounting to 972p per share.

Investec analyst Steve Liechti says: ‘This implies an enterprise value of £4.5bn for UBM and a very high 2018 pre-synergy EV/EBITDA of 14.6 times or 12.9 times on our assumed £40m savings (1.5% of total combined sales).’

In Liechti’s view this is a ‘full price’. He adds: ‘We see a good potential deal for UBM given a nice implied exit premium vs growth questions.’

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