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The company has switched from asset seller to asset buyer which changes the risk profile of the business

Ascential (ASCL) 428.6p

Gain to date: 23.9%

Original entry price: Buy at 346p, 19 October 2017

An interesting acquisition by media outfit Ascential (ASCL) is a useful opportunity to update on the progress of a stock we first highlighted in October 2017.

In the interim the shares have ticked along nicely to mark fresh all-time highs earlier in June despite negative analyst comment from Berenberg in April. The investment bank had cut its recommendation from ‘buy’ to ‘hold’ and its price target from 420p to 400p on growth fears.

On 15 June Ascential announced the acquisition of marketing intelligence business WARC in a deal worth an eventual £24m, funded from cash reserves and existing lending facilities.

The deal, which should complete in July and is expected to be immediately earnings enhancing, was agreed ahead of the company’s key Cannes Lions advertising festival which runs until 22 June. Numbers are down for the festival thanks to a restructuring and a pull-out by French agency Publicis.

The plan is to combine WARC with Cannes Lions’ new digital platform The Work to create a product of scale. It fits with the company’s ambition for diversifying the business into subscription-based information services.


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