ITE is buying the world-leading Mining Indaba conference and exhibition for £30.1m – half the price Euromoney paid for it in 2014. The 23-year-old event, which takes place annually in Cape Town, this year made EBITDA profit of £3.7m on sales of £7.2m.
The sale represents another strategic shift for Euromoney which had acquired Indaba for $78m (£60m). It had seemed to fit with the company’s (former Metal Bulletin) metals and mining portfolio. So, does this cut-price divestment signal that yet more is to follow in CEO Andrew Rashbass’s strategic clear-up? The 8x EBITDA price for a well-established, high-margin exhibition and the fact that the Indaba sale is only partly being settled in upfront cash suggests Euromoney is, let’s say, an enthusiastic seller.
ITE will make an initial payment of £20m, with the remaining £10.1m being paid in June 2019. But what looks like a very good deal for ITE did not quite make it a good week. In a reminder of the changes being wrought by the company, which once depended on the Russian market, ITE warned that the fall in the Russian rouble and also in the Brazilian and Turkish currencies would hurt 2019 results. But investors are expecting great things from the 27-year-old exhibition company’s transformation, including the £300m acquisition of the International Spring Fair and other retail shows from Ascential.
With almost £80m of revenue in 2017, it is believed that these events could triple ITE’s revenue to at least £230m with profit margins of more than 25%. Revenues from Russia are forecast to fall to some 25% of the ITE total, compared with more than double that just a few years ago. The UK will now be bigger than Russia for ITE.
If the company achieves its targeted £5m of cost savings on the seven acquired exhibitions, CEO Mark Shashoua (who once managed the International Spring Fair et al for Ascential) will have delivered real stability to a company once so sensitive to the volatility of Russia and other developing economies.
For the most recent year (up to September 2018), ITE is expecting to report like-for-like profits up 10%. But that’s just the start in ITE’s race to be a diner not the dinner in the growing consolidation of global exhibitions.