T&F Acquires IIR for $1.4 Billion

Purchase includes more than 1,400 conferences, sets valuation record

By Margo McCall -- Tradeshow Week, 6/13/2005

Fledgling strategic buyer T&F Informa fought off financial investors to pick up U.K.-based competitor IIR Holdings for $1.4 billion — a price that once again underscores media properties' rising popularity.

The acquisition of IIR, a producer of more than 1,400 conferences and 40 exhibitions, gives the publicly traded T&F a stronger foothold in the conference and exhibition space and beefs up its presence in North America. IIR — short for Institute for Intl. Research — also provides corporate training and consultation.

"We know the IIR events business well, and it will clearly complement our existing events business, geographically and by sector," T&F Informa CEO Peter Rigby said in a statement.

The transaction amount was viewed as a sign that buyers are willing to pay record prices for business-to-business properties at a time when there's a frenzy of interest from private-equity firms with hundreds of millions to invest.

"It certainly is very much an indication of the temperature of the current merger-and-acquisition environment," said Joel Novak, managing director of Berkery, Noyes & Co. "Robust double-digit multiples are where the market is heading."

The auction of IIR wrapped up just days after JPMorgan agreed to spend $650 million for Veronis Suhler Stevenson's Hanley Wood, the Washington, D.C.-based producer of 22 magazines, 17 Web sites and 15 tradeshows, mostly in the building and construction sector. Multiples for Hanley Wood exceeded 13 times operating cash flow.

The fast-growing IIR — which last year reported a doubling of its operating cash flow to $87.8 million — commanded multiples of nearly 16 times operating cash flow.

That is significantly higher than the nine to 11 times such media properties normally fetch, said Scott Peters, managing director for Jordan Edmiston Group Inc. "It is a very rich price," he said.

Peters said the high valuations are being driven by the low cost of capital, and the enormous amount of private-equity money available for investments. "I think valuations in general are as close to an all-time high as I can remember. The market is on fire right now because of the low cost of capital. The big private-equity funds are desperate to invest."

Nonetheless, Peters said, the IIR acquisition makes sense for a strategic player intending to grow the business over the long term. "They don't have this 'flip' mentality. They're not out looking to sell it in a few years. As long as they don't get into trouble with their lenders or violate their covenants, it is a good acquisition."

Moreover, deals of this size don't come along often. Novak said by measure of its size and growth record, the privately held IIR is definitely "a trophy property."

"It's one of the few significant global platforms. It's probably the largest in the industry," said Peters, who described it as a "once-in-a-lifetime acquisition."

Irvine Laidlaw, a Scottish lord, established IIR as a newsletter publisher in 1973, expanding into conferences in Europe and Singapore five years later. IIR opened offices in Singapore and Hong Kong the following year, expanding conference activities into Malaysia, the Philippines, Indonesia and Thailand.

An exhibitions unit was opened in Singapore in 1984. Today, the exhibitions unit operates offices in London, New York, Monaco and Singapore. Among its high-profile shows are the Monaco Yacht Show, which most recently drew 21,000 attendees and 530 exhibitors.

T&F Informa, meanwhile, was established a year ago with the merger of Informa Group and Taylor & Francis Group. With more than 50 offices in 18 countries, the company employs 4,000 people and produces 2,800 conferences and courses, and 2,000 academic journals and online newsletters.

The agriculture division puts on more than 40 international conferences. And the maritime division produces Lloyd's List, the nearly 300-year-old shipping newsletter. T&F also provides companies with event-planning services.

After the acquisition, 40 percent of T&F's revenue will be generated in the United States, compared with 30 percent previously. T&F's second-biggest market is continental Europe, followed by the United Kingdom and Asia.

Although overshadowed by IIR, two other tradeshow companies also nailed acquisitions. The purchase of two French exhibition businesses gave Tarsus Group — producer of Labelexpo, Label Summit and Off-Price Specialist shows — a start in meeting its goal of doubling the size of its French portfolio. The London-based media company spent $16.4 million to acquire Mobile Office, held each December in Paris, and Heavent event-marketing exhibitions held each March and November at the Hippodrome du Longchamp in Paris. The Heavent events each draw about 12,000 attendees and feature a 16,000 square meter (172,223 square foot) showfloor with about 350 exhibitors.

Dmg world media, meanwhile, acquired Bathrooms & Kitchens Expo from Quantum Business Media, in addition to a supporting magazine, directory and awards show. The properties will be managed from dmg's Harrow, U.K. office, which is currently responsible for dmg's Daily Mail Ideal Home Show consumer exhibition and various kitchen, bedroom, bathroom and furnishings magazines.

The biennial Bathrooms & Kitchens Expo, launched in 2001, drew more than 200 exhibitors to a 9,000 sq. m. (172,223 sq. ft.) showfloor at the ExCeL London.