The scale of would-be acquisitions across B2B information – and the rising multiples being paid for subscriptions businesses – suggest that this just might be the year when the London-based Commodities Research Unit (CRU) will be sold.
The 50-year-old company is an information provider and consultant on the global metals, mining and fertiliser industries. It’s privately owned by Robert Perlman and has annual revenue of some £45m. It is a key provider of analysis and prices for steel and the raw materials that make it (coal and iron ore). This market probably generates some 30% of the total profit of CRU which has offices in the UK, US, Chile, China, Singapore, Japan, India, Brazil and Australia.
The company is a highly-rated specialist but was not always as impressive. In the 1980s, CRU seemed to lose much of its expertise (and some key staffers) on the copper market in which it had long specialised. It was also relatively slow to develop Price Reporting Agencies, now regarded as high-value information gateways which are now dominated by S&P Global (Platts), Argus Media, and Euromoney (Fastmarkets).
PRAs are attractive because they are the “official” prices which govern trading in the world’s commodity markets. They are the exclusive information sources which facilitate transactions, consulting and high-value research. In many ways, Metal Bulletin (acquired by Euromoney for £200m in 2006) was a PRA pioneer. The operation (now known as FastMarkets) began life in 1913 as a spin-off from The Ironmonger magazine, to service the global markets using the London Metal Exchange (LME) for price discovery and risk management.
Euromoney was involved in abortive negotiations to acquire CRU several years ago. Since then, it has been building its portfolio of PRAs covering metals, mining, forest and agriculture products. Its development of pricing for the raw materials used in the batteries for electric cars underlines the scope for new PRAs to be created as technology develops.
Euromoney is the 52-year-old, £1bn business information company founded by the Daily Mail Group which sold its remaining 49% shareholding in 2019. That sell-off now looks like another piece of great timing by the cashed-up newspaper group because it pre-dated Euromoney’s failed attempt to sell its under-profitable asset management division (which still accounts for more than 30% of group revenue) – and also came before the pandemic that paralysed events activity. But Euromoney (whose share price has jumped 24% in the past 12 months) remains a substantial international group:
| y/e Sept | 2019 | 2020 (est) | 2021 (est) |
| Revenue | £401.6m | £335.2m | £321.5m |
| EBITDA | £110.2m | £67.2m | £63.0 |
| Margin | 27% | 20% | 20% |
| Net cash | £50.1m | £28.1m | £35.5m |
More than 70% of its revenue is from subscriptions. And the Fastmarkets pricing division is expected to account for 26% of revenue and 42% of EBITDA in 2021. It was Euromoney’s fastest growing division in the first-half of 2020-21, generating £15.2m operating profit from £40.2m revenue. Volatile world commodity prices are good for business.
The acquisition of CRU could all but transform Euromoney, perhaps adding at least £20m to profits on a 2021 basis. The two companies know each other well. But CRU is not up for sale, so an unsolicited offer will have to be persuasive. Perhaps £200m (20 x EBITDA, 4 x revenue) will do it.
