Acquisitions
Tarsus Group plc (“Tarsus”, the “Company” or the “Group”), the international business-to-business media group, announces that it has agreed to enter the following transactions:
• an acquisition of the remaining 50% stake in the Group's existing Mexican joint venture (“EJK Tarsus Mexico”) from E.J. Krause & Associates, Inc (“EJK”) for cash consideration of approximately US$18.0 million;
• an acquisition of a further 25% interest in AMB Tarsus Exhibitions Sdn. Bhd. (“AMB”) in South East Asia, taking its overall interest to 75%; and
• a strategic partnership with Streamline Marketing Group (“SMG”) in UAE,
together the “Transactions”.
Placing
Tarsus also announces today that it intends to place new ordinary shares of 5 pence each in the capital of Tarsus (the “Placing Shares”) to raise minimum gross proceeds of £24 million. The Placing Shares are being offered by way of an accelerated bookbuild (the “Placing”), which will be launched immediately following this announcement.
The final number of Placing Shares, which will not exceed 9.99 per cent of Tarsus' existing issued share capital, will be agreed by the Joint Bookrunners and the Company at the close of the bookbuild process, and the results of the Placing will be announced as soon as practicable thereafter. The timings for the close of the bookbuild process, pricing and allocations are at the absolute discretion of the Joint Bookrunners and Tarsus.
The net proceeds of the proposed equity placing will be used to fund the US$29 million combined consideration for these transactions. Any remaining proceeds will be used to provide financial flexibility in continuing to pursue the Company's strategy. The Directors of Tarsus believe that together the Placing and Transactions will be earnings accretive over the biennial cycle. The Directors and the Company Secretary of Tarsus intend to subscribe for Placing Shares with a value amounting to approximately £600,000 in aggregate. The Placing is not conditional upon completion of the Transactions.
Deutsche Bank AG, London Branch (“Deutsche Bank”) and Peel Hunt LLP (“Peel Hunt”) are acting as joint bookrunners (the “Joint Bookrunners”) in respect of the Placing.
Trading update
Tarsus has traded in line with the Board's expectations in the period since the announcement of its interim results on 26 July 2018. Bookings for the remaining 2018 shows are up 9% and buyers for the year to date are up 12%, both on a like for like basis. Bookings for the large 2019 events are performing well.
Highlights:
• Acquiring minority shares of existing joint ventures in Mexico and South East Asia.
• Strategic partnership with SMG, a complementary aerospace asset in the UAE.
• Strategic rationale in line with Tarsus' Quickening the Pace 2 (“QTP2”) strategy:
o Strong financial track record; and
o Organic growth opportunities, including event replications.
• Net proceeds of the Placing will be used to fund the Transactions, with any excess funds to be used to provide financial flexibility in continuing to pursue the Company's QTP2 strategy.
• The Directors of Tarsus believe that together the Placing and Transactions will be earnings accretive over the biennial cycle.
• Tarsus has traded in line with the Board's expectations in the period since the announcement of its interim results on 26 July 2018.
• The Group is well placed to continue to deliver encouraging growth in 2018 in line with management's/the Board's expectations
Commenting on the Placing, Douglas Emslie, Group Managing Director, said:
“These deals represent an exciting expansion in three of our key territories. In line with our “Quickening the Pace 2” strategy we continue to buy in minority interests where there is a compelling business case to do so.
Mexico is a large and fast-growing market and this agreement to acquire the remaining 50% interest in EJK Tarsus Mexico, thereby assuming full control of the Mexican business, represents an excellent opportunity for the Group to accelerate its growth.
Through our AMB joint venture Tarsus has successfully expanded its footprint in South East Asia. Our acquisition of a further 25% interest in the business allows Tarsus to take control of the operation whilst also retaining the existing entrepreneurial management who will continue to run the business day to day.
I am also excited by the prospect of continuing to work with Andrew Siow and the AMB team in South East Asia. Andrew is a very experienced exhibition professional with over 30 years' experience launching in the region.
The agreement to enter into a strategic partnership with SMG in the UAE represents a good bolt-on opportunity to our existing aerospace portfolio. I look forward to working with the SMG team to grow the business going forward.”