Informa Group plc
Informa Group plc
Sales: £283.5 million (2002)
Stock Exchanges: London
Ticker Symbol: INF
NAIC: 511120 Periodical Publishers; 511140 Database and Directory Publishers; 514199 All Other Information Services; 561920 Convention and Trade Show Organizers
Informa Group plc assembles and sells specialized information in six broad business sectors: finance and insurance; telecommunications and media; law and tax; maritime, trade, and transportation; life sciences and pharmaceutical; and energy and commodities. Informa had £283,442 in 2002 revenues, down about 12 percent from 2001. The largest share was contributed by Informa’s finance and insurance market sector with 28 percent. Telecommunications and media came in with about 18 percent of 2002 revenues; maritime, trade, and transportation with 16.5 percent; law and tax with about 16 percent; commodities and energy with 11 percent; and life sciences and pharmaceutical at 10 percent. In 2002, Informa had more than 1,500 print and online products and organized over 3,500 conferences and exhibitions. The company has more than 80,000 subscribers to its print and online products in approximately 188 countries. Its conferences were attended by over 150,000 delegates. Informa has 50 offices in 18 countries.
Newspaper Roots in the 17th Century
Although the Informa Group plc is a young entity, formed by a merger in late 1998, its earliest roots lie in the 17th century English insurance industry. In 1688, Edward Lloyd opened a coffeehouse near the London docks where seamen, captains, shipowners, maritime brokers and underwriters, and others from the maritime industry would gather to hear the latest news and discuss developments in shipping. By the end of the 1600s, Lloyd’s Coffee House had evolved from an informal meeting place to a center of marine insurance where those looking to insure a ship or other maritime undertaking could find underwriters willing to take on risk. Eventually, Lloyd’s became Lloyd’s of London, one of the most famous and successful insurance exchanges in the world.
Although he lent his name to the burgeoning association of underwriters, Edward Lloyd remained a mere coffeehouse proprietor. He never became involved in the nascent insurance business. However, he did take pains to provide his clientele with the latest information assembled from his sources around the docks. In 1696, he began publishing Lloyd’s News, which was devoted mainly to trade and maritime news. He ran afoul of the government in 1697 when the English Crown took offense to a brief item about a Quaker petition in the News. The independent-minded Lloyd simply ceased publication rather than print an apology. In 1734, he launched another publication, the weekly Lloyd’s List and Shipping Gazette, reputed to be the oldest surviving newspaper in the English language. Beginning as primarily a list of departures, arrivals, and other ship movements, the paper eventually included general news alongside its maritime and commercial news. Lloyd’s List quickly became one of England’s most respected sources of business information. It increased its publication schedule to twice weekly in 1737 and to daily except Sunday in 1837.
With the abolition of the English advertisements tax in 1854, Lloyd’s List began accepting advertising for the first time in its history. The company introduced a new publication in 1880, Lloyd’s Weekly Shipping Index, which summarized the casualty reports and ship movements. By the end of the 19th century, the weekly edition also included general news and had a circulation of one million, one of the highest in England. Lloyd’s List stopped running its ship movements and casualty reports during World War I and World War II for security reasons, although the reports continued to be published in limited, classified editions. After World War II, the company launched a new publication, Lloyd’s Voyage Record, a weekly listing of all movements of ships currently at sea. Throughout its history, Lloyd’s List was published by the insurers Lloyd’s of London. In 1973, Lloyds formed a subsidiary, the Lloyds of London Press (LLP) to oversee all of its information gathering and publishing activities, including Lloyd’s List.
Independence and a Merger in the 1990s
LLP continued as a successful enterprise. By the 1990s, it was the publisher of a roster of business periodicals—including Lloyd’s Loading List, Catastrophe Reinsurance Newsletter, Lloyd’s Law Reports, and Lloyd’s Confidential Index —employed approximately 300 people, and had begun operating as an organizer of business conferences. In 1994, it reported a £4 million profit. The early 1990s, however, were a difficult period for the insurance industry, with losses totaling approximately £11 billion. In 1995, Lloyds of London, looking to raise desperately needed cash, put LLP on the sales block. Both the Economist Group and publishers Reed Elsevier were among the bidders. In December 1995, however, an LLP management team emerged as the successful buyer. Backed by the venture capitalist firm 3i, the group paid a reported £82.5 million for the publishing house. After the sale, management held a 25 percent interest, 3i held 30 percent, and two other venture capital firms held a combined 30 percent. The purchase price included all LLP print publications, its electronic information services, and its conference organizing arm. In addition, the new owners were able to license the Lloyds name to insure continuity in the titles, a deal that specified that royalties would be paid if certain revenue levels were reached.
With the sale, the company assumed a new name, LLP Group plc. By 1997, the first Internet boom was in full swing and the firm began a push to make its products—in particular the venerable Lloyd’s List —available in electronic form online. An initial stock offering was selected as the vehicle to raise funds. The offering was made on the London Stock Exchange in April 1995 with a 285p opening price. On the eve of the offering, LLP’s CEO David Gilbertson announced that the company would use the £137.5 million it hoped to raise on a series of acquisitions, mainly small information providers in the insurance and trade sectors. While the stock offering went off well, problems developed soon afterward. The Asian financial crisis struck, hitting the maritime shipping industry hard. This in turn hurt LLP, which counted hard-pressed marine companies among its most important customers. By the autumn of 1998, LLP’s stock price had tumbled by almost half to 150p.
In November 1998, the LLP group announced it would merge with another British company the IBC Group plc, previously known as the International Business Communications Group. IBC, another information supplier known primarily for conference organization and financial publications, was founded in 1964 and listed on the London Stock Exchange in December 1985. Immediately after its LSE listing, IBC went on an acquisition spree, beginning with publishers Stonehart Group in June and following that with the purchase of two other publishing businesses. With offices in 16 countries, IBC boasted an international presence, along with 1997 annual revenues of £139.6 million, up nearly 15 percent from 1996. The two companies planned to combine their titles and services to create what they called a “one-stop-shop” for business information. The idea had great promise: together the two companies had a list of approximately 5 million customers and a combined product list comprising almost 1,000 different titles in areas as varied as finance and insurance, telecommunications, information technology, maritime commerce, and energy. Electronic publishing already comprised about 15 percent of their total business, and the new group planned to forge ahead and quickly put much more online.
The merger was structured as a takeover of IBC by the LLP Group. Nonetheless, IBC stockholders received 165 LLP shares for every 100 IBC shares and once the merger was completed, former LLP stockholders owned only 43 percent of the new company. LLP’s CEO David Gilbertson kept the same title at the new company, Informa Group plc. The chairman of the new firm was Peter Rigby. Rigby was a fast-track executive who had begun his career as an accountant, joining Stonehart in 1983. He joined IBC after its takeover of Stonehart and was named its CEO in 1990 at the age of 33. Analysts speculated that Informa would have annual sales of approximately £188 million annually, although Rigby and Gilbertson felt that the synergies created by combining forces would enable the company to significantly boost revenues beyond that amount. They planned to accomplish this goal not through economies of scale but by expanding product offerings and using the firm’s conference capabilities to create “constituencies” for its publishing products. The investor community approved the merger. With the announcement, LLP’s stock price rallied out of it doldrums. The £315 million merger was completed on December 16, 1998.
Informa is a business information group delivering high value content to clients worldwide using a broad range of media formats. We are focused on six global market sectors: Telecoms and Media; Maritime, Trade, and Transport; Finance and Insurance; Commodities and Energy; Law and Tax; and Biomedical and Pharmaceutical Our information is delivered in a wide range of formats, both traditional and electronic. Informa’s aim is to be media neutral: to respond to customer information requirements using whichever media are best suited for the task. Among the formats currently used are newspapers, magazines, newsletters, books, conferences, exhibitions, CD-ROM, and Internet and other electronic online services. Informa is a global company with over 50 offices worldwide offices generating sales in more than 180 countries.
Acquisitions and Hardship in the 2000s
Almost immediately, Informa took the quick road to growth, launching a series of acquisitions that would continue almost unabated, through good times and bad, for the next five years. The most important targets for takeovers were those in areas where Informa’s presence was weak, especially biomedical and pharmaceutical publishing. It also hoped to establish itself in the United States. It took a step in that direction in January 1999 with its first purchase for £2.1 million cash and bonuses of Linkraven, a publisher of aviation magazines with a large base of customers in the United States. Not long after, Informa acquired an Australian business newspaper, the Daily Commercial, from APN News & Media Ltd for $10 million. By March, most of Informa’s titles were available in electronic form, a fast growing profit center for the firm. The London stock market responded favorably to developments, boosting the prices of Informa’s stock by over 60 percent in the first four months following the merger. Success was helped by Informa’s size, which qualified it for inclusion in the FTSE 250 index, bringing it to the attention of mutual fund managers who would have ignored LLP or IBC because they were too small.
In June 1999, Informa closed another major acquisition, Washington Policy and Analysis Inc. (WPA), a consultancy firm and information provider in the field of energy and government energy policy that counted most large U.S. utility companies among its clients. Informa paid a reported $3 million and offered bonuses based on performance. The purchase was seen as another important step in establishing Informa’s foothold in the United States. Five months later, the company paid £28 million to the British publisher Emap for a group of businesses that included 13 business magazines such as Containerisation International, International Freighting Weekly, Insurance Age, and Fishing News, seven exhibitions, and the Liner Shipping Network, an online service. The acquisition was Informa’s largest to date.
Only a month later, Informa made yet another huge purchase when Financial Times decided that Baskerville Communications, its newsletter division, no longer fit among its core activities. In the £13.5 million deal, Informa received 60 newsletters, 600 management reports, 24 Financial Times business directories, 13 publications on the telecommunications sector, and a license to use the Financial Times name for three months.
Informa’s first year was a successful one. The company reported profits of £32.7 million, up 19 percent, as well as increases in conference registrations, especially among first-time attendees. The largest gains came in the telecom and media sectors. Industry analysts said all Informa needed to do to make its success perfect was further bolster its life science offerings. Informa’s acquisitions in 2000 included Bysis Research Services, a U.S. provider of financial information used by all of the 25 top banks in the country, and several products from the British information company IIR. In August, the firm announced that it intended to spend an additional £50 million on acquisitions over the next half year. In early 2001, Informa began making good on that promise by acquiring for £30.3 million the financial product analyst firm MCM Group, whose services were sold in 57 countries to 2,000 institutions. A brief scare occurred in June 2000 when Informa’s share price fell sharply after an announcement that delegate bookings for its upcoming telecommunication conferences had dropped. By 2001, however, the stock was up among the best performing British issues once again, reaching 552.5 p in February despite continuing rumors of declining attendance, as well as the layoff of more than 150 staff at the same time. Investor confidence in Informa was bolstered by the news that it had significantly strengthened its life science offerings with the purchase for £21.8 million of Eaton Massachusetts Business Trust, the publisher of the respected journal BioTechniques. The acquisition of the successful publication—the Financial Times estimated that its profits could grow by 50 percent within a year—also helped reduce Informa’s unhealthy dependence on its telecommunications business at a time when telecom, after months of barnbusting business, was showing signs of a slow-down.
Although chairman Peter Rigby insisted that the telecom sector was doing just fine—registrations for the company’s flagship exhibition, one put on by the telecom industry, the GSM World Congress, were up 30 percent—other sectors were suffering. In April 2001, with a general decline in worldwide shipping, publication of the venerable Lloyd’s List was cut back from six days a week to five and its staff reduced by 20. Two months later, after attendance at some of its telecommunications events fell by as much as 50 percent, Informa laid off another 150 employees, 5 percent of its telecom staff. In June, difficulties grew as shares fell by 50 percent. Amid uncertainty as to how the company would respond, the English newspaper the Guardian marveled that they had not fallen by more.
- Edward Lloyd opens Lloyd’s Coffee House near London’s docks.
- Lloyd’s News begins publication.
- Lloyd’s List begins publication.
- Lloyd’s List accepts advertising for the first time.
- Lloyd’s Weekly reaches 1 million in circulation.
- International Business Communications is founded.
- Lloyds of London Press (LLP) is founded.
- A management team buys LLP from Lloyds of London.
- LLP Group merges with IBC Group to form Informa Group.
- Informa acquires Linkraven, Washington Policy and Analysis Inc., Baskerville Communications, and a portfolio of products from Emap.
- Informa acquires Bysis Research Services and MCM Group.
- Attendance at Informa hurt by September 11 terrorist attacks.
- Informa enters into an agreement to provide information to China’s Xinhua News Service.
Informa continued to acquire promising companies, however, adding Evandale Publishing, a specialist in insurance and finance, to its roster in August 2001. Just as the firm announced that it had weathered the storm, a catastrophe of major proportions, both human and commercial, occurred. On September 11, terrorists flew two airliners into New York City’s World Trade Center. The result was an immediate fall-off in air travel to the conferences Informa organized. With half of Informa’s revenues derived from conferences, and American delegates alone accounting for about 3.5 percent of all the company’s annual revenues, declines in attendance of 15 to 20 percent were projected for some 3,400 conferences. For a time, it was as bad as expected. A major telecommunications event in Barcelona saw attendance drop by 75 percent from the previous year. In the wake of September 11, Informa eventually cancelled about 200 conferences. To make matters worse, advertising at its maritime and financial publications was falling by 25 percent.
Early 2002 was a period of apprehension at Informa. By June, when two telecommunications conferences in the spring, the GMS Congress and the SPEX, did much better than hoped, the worst times seemed to be past. During the dark days of 2001-02, Informa had continued to cut costs, which helped restore investor confidence. In March 2002, it made news when it received a contract to arrange conferences in China and to provide financial information to China’s Xinhua News Service. In September 2002, a year after the devastating terrorist attacks, Informa announced a new security service for U.S. ports and customs authorities. As 2002 drew to an end, the firm’s decision to develop its life science side proved a wise one. Strong growth in that division kept Informa’s 2002 revenues respectable, if not as strong as earlier years. A lack of erosion in subscription levels at its various niche publications helped as well.
It was feared that the threat of war in Iraq in early 2003 might dampen conference attendance once again. That was not the case. After its experiences in the autumn of 2001, the company eliminated a number of smaller, more marginal and less profitable events. Delegate numbers, for example, at the GSM World Congress fell somewhat, but increases in sponsorships offset those losses. The emergence of the SARS virus in Hong Kong hit Informa hard in the spring of 2003. The company was forced to cancel all of the Far East conferences it had organized for April 2003. Informa’s shares dropped slightly as a result, but the company expected to be able to reschedule most of the cancelled events at a later date.
Advanstar Communications; Bloomberg LP; Crain Communications, Inc.; Hoover’s Inc.; Information Services Handling Group, Inc.; International Data Group; The McGraw-Hill Book Companies, Inc.; Phillips International, Inc.; PRIMEDIA, Inc.; ProQuest Company; Reed Elsevier Group; Reuters Group Plc; Thomas Publishing Company; Vance Publishing Corporation; VNU N.V.
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—Gerald E. Brennan