The UK-listed Euromoney Institutional Investor plc (Euromoney) is buying The Deal (an M&A database) and BoardEx (profiles of business leaders) from TheStreet Inc in a transaction which highlights the divergent fortunes of two financial media groups.
On the one hand, the cashed-up, increasingly US-focused Euromoney is paying $87.3m for two subscriptions businesses that cost TheStreet just $28m in recent years. On the other, TheStreet is selling assets whose $25.2m revenue is some 50% of the whole company. And, while Euromoney’s own broker may be exaggerating its expected 25% profit margins (leading them to declare the price of 12 x EBITDA), the acquired B2B businesses still might account for most of TheStreet’s profit. Which just shows you what has happened to the 22-year-old New York company whose value peaked at $1.7bn in 2014 and is now below $80m.
The company was founded by Jim Cramer, journalist turned hedge fund manager and celebrated TV host (CNBC’s Mad Money), and Martin Peretz, publisher of The New Republic. The sale to Euromoney follows TheStreet’s divestment of RateWatch to S&P Global for $33.5m.
Those deals, heavy staffing cuts and new paywalls have been the back-to-profit highlights of the three-year reign of former USA Today editor-in-chief Dave Callaway. The newspaper veteran is now expected to quit as CEO of TheStreet after pointedly saying the board had decided to make this latest sell-off.
For the once-sprawling Euromoney, which generates some £110m of EBITDA at a 25%+ margin, it is the largest acquisition of a post clear-out spree by CEO Andrew Rashbass (ex Reuters and The Economist). Whisper it softly but the three years since his appointment have changed plenty of soft things in a company once known as much for a somewhat bullying culture as for brands like Institutional Investor, BCA Research, Metal Bulletin, Insurance Insider, and Euromoney itself.
More visibly, the Euromoney revolution started with the 2016 sell-down of what had been parent company DMGT’s majority stake. Then came this year’s disposal of the low-margin Hong Kong-based Global Markets division for $180m, followed by the $20m acquisition of Random Lengths, a Price Reporting Agency for the global wood products industry.
Many investors expect more PRA deals and, in that sense, the acquisition of The Deal and BoardEx was unexpected. But the £1.4bn Euromoney also likes subscriptions (almost 60% of current revenues) and events. That’s why it’s expected to bid for Centaur Media‘s The Lawyer. Even at the highest price touted (£40m), The Lawyer would only take 50% of Euromoney’s net cash.
It could be one way for the rejuvenated UK company to celebrate its 50th anniversary in 2019. But there will be plenty of others.