Haynes Publishing, the 60-year-old listed UK company best known for producing car maintenance manuals, is being acquired by the France-based B2B group Infopro Digital.
The UK publisher had been put up for sale in 2019 after the death of its founder. The £114.5m price (9 x 2018 EBITDA) was a juicy 62% premium to last week’s stockmarket valuation and may be further inflated by Haynes’ pension fund deficit (£24m last year). The sale price highlights the Haynes shift to online, B2B audiences, and international markets which now account for 72% of the £36.2m revenues. It’s no longer just a British book publisher.
The deal is the latest in an acquisitive 19 years during which Infopro has become a substantial B2B media group with revenue of €444m and 3,300 employees. Almost 50% of the revenue of what had been a French domestic company now comes from the rest of Europe, the US and Asia.
Infopro was founded in 2001 by Christophe Czajka, a senior executive of what is now the Springer Nature STM group. His experience as a consultant at Bain and in Hong Kong banking has proved to be as important as his publishing. He has completed some 25 acquisitions across automotive, construction, retail, compliance, insurance, and financial services.
There’s been plenty of opportunism. In 2013, Infopro acquired Groupe Moniteurs, publisher of Le Moniteur des Travaux Publics et du Bâtiment, a construction business weekly whose group has 1,000 people and revenue of €165m. Interestingly, just seven years before, the same company had claimed revenue of €160m – and 700 people. It now has a weekly circulation of 45k and “several events” including awards and conferences. It is a strong French B2B brand and also has large, if scarcely profitable, digital services.
The print-emphasis doesn’t quite capture the digital-chic of a company which proclaims: “We transform information into performance for professionals in a digital world.”
In 2017, Infopro paid £120m for the insurance and financial services “Insight” division of Tim Weller’s UK-based Incisive Media. That was 10 x EBITDA and 3 x revenue for B2B media that had little in common with a company then primarily in construction and automotive. But it brought Infopro (and its founder) to London.
Then along comes Haynes which may be even pricier than it seems. While there is scope for Infopro to plug the car manuals into its automotive B2B services, the fact is that a full 46% of Haynes’ last reported revenue still came from consumers buying those manuals for their own cars like they have been doing for decades. That revenue stream is inevitably ex-growth and Infopro may have paid a multiple of 12-15 x EBITDA for the 54% of the business it really wanted.
It prompts the big question about Infopro. Its strategy unfashionably mirrors those of 20th century B2B monoliths like the former Reed Elsevier, UBM, Penton, McGraw Hill, and EMAP whose multi-sector strategies were based principally on the scale economies of printing, advertising sales and circulation databases. After the collapse of print and the withdrawl of the conglomerates, the market has seemed increasingly to belong to single-sector specialists whose “narrow but deep” integration has also given them access to high value services like consultancy, research and training.
Infopro’s own description of its activity in the automotive sector makes the point about just how specialist B2B media needs to be: “Infopro Digital is one of the leading automotive data companies in Europe. Its products and services span repair methods and technical information, spare parts catalogues, dealership management software solutions, pricing tools, analytics tools and marketplaces.”
But, in so many ways, Infopro really is “back to the future” B2B media with a seemingly traditional portfolio of 60 print publications and 40 exhibitions, even though more than 30% of its revenue comes from 30 digital-only services. It is “committed to servicing professionals” across at least six sectors and internationally. While the company has some impressive, fast-growing businesses, its worldview seems, well, random with some of its market sectors represented only in one or two of the 15 countries in which it operates.
For all the apparent contradictions, however, Infopro is a “hot” company for private equity. Towerbook, the four-year current majority owner which had also been a founding investor back in 2001, is the fourth pe firm which has featured in the French company’s buy-and-build strategy. In addition to its demonstrable skill in squeezing value and organic growth from acquisitions, Infopro’s appeal may be based on four realities of B2B media viz:
- Technology can be a game changer
- Print brands can be strong “runways” for digital growth
- Most B2B media markets can be global
- Exhibitions are producing stellar profit margins and growth
Infopro is believed to be generating at least €120m of pre-tax profit. For all the technology talk, the business does not need much CapEx, so it may be generating more than €100m of cash. The model is working.
On the flipside, however, are the longer-term realities that much of the competition for technology, database marketing, and exhibitions comes from horizontal “channel” specialists, e.g. multi-sector, global exhibition organisers and consulting companies. While it would be perfect for one media company simultaneously to own: the must-have information, the leading exhibition(s) and the best workflow technology in any sector, that’s just a dream. Ultimately, B2B media must concentrate on distinctive, winning products and services, not clutter the portfolio (and distract the management) with marginal activities that just happen to be in the same market.
For all the myriad of potential B2B opportunities in any sector, it is difficult to escape from the simple fact that high-quality B2B companies must seek to own at least some key statistical indicators, pricing indexes, and data. Information ownership is the guarantee of long-term relationships and revenue. Everything else is ephemeral.
The trouble is that – in the short-term – nothing beats the profitability of advertising, content marketing, sales lead generation, and affiliate e-commerce.
But, in many B2B sectors, there are still opportunities to produce paid-for information on pricing, costs, activity and transactions.
The ideal scenario for B2B companies, of course, is to develop high-value pricing/ statistical content and also maximise “current” profit growth from print, events and digital. It’s easier said than done but, perhaps, that could become the real story of Infopro. Not magic, not revolutionary, but highly effective systems, people, M&A – and profit margins.
Will Towerbrook seek an IPO in 2020, once the post-Brexit cross-border fears evaporate? Or might Infopro reverse into the UK’s listed Centaur Media (market cap: £60m)? The market’s hungry for digital-chic.