Informa to buy Datamonitor

14 May 2007

Boy, I stick my head
into a spreadsheet for a couple of hours and I almost miss the biggest industry
analyst story of the year so far – well in Europe anyway.
 
Informa announced this morning
their intention to acquire Datamonitor for £502 million, which is around $1
billion. Initial opinions are split as to whether or not this makes financial
sense, although I would tend to think it does once you look at the
various component parts that make up DM following its own run of acquisitions
that have bagged it both Butler Group and Ovum over the past couple of years or
so (I
wrote about the latter on ARcade
) although only time will tell. The price (a
10% premium on DM’s market cap) does suggest that Informa has aggressive plans -
they have already said that the decision was based on revenue generating
possibilities rather than a desire to cut costs. 
 
In terms of scale,
the new company will be larger than IT research firm Forrester Research, but
still smaller than Gartner or IDC, but is active in much broader business
sectors including strong healthcare (Academic & Scientific) and professional services divisions. Informa is very active in events, organising over 10,000 each year. The revenue split for its three divisions in 2006 was:
Informa Telecoms and Media sits within the Commercial division along with eight other units, so the tech element is actually small relative to the whole. Obviously, acquiring DM will likely change this split significantly, although DM is not a pure tech research firm either.
 
Assuming that the
deal goes ahead, the different elements within the new organisation have rather
different and generally complementary attributes and the real challenge, as in
any M&A deal will be to ensure that the different parts work together and
don’t clash resulting in an implosion.
 
Among AR folks, Jonny is more positive about the announcement than Duncan, while David sticks to reporting facts and has yet to give his opinion.
 
 
EDIT (May 16, 2007):
 
David has now given some analysis of the acquisition (more to follow) and The Independent’s Market Report noted that City analysts have received the news with something less than jubilation, writing that “Brokers were not quite so enthusiastic about Informa after Monday’s
£502m acquisition of the market researcher Datamonitor. Panmure Gordon
and Morgan Stanley issued cautious advice based on Datamonitor’s price
tag, with Morgan Stanley noting that the acquisition dramatically
alters Informa’s risk-to-return profile. Informa shed 27p to 586.5p.”
 
/EDIT 

4 Responses to “Informa to buy Datamonitor”

  1. David R

    Dom, my analysis (some of it at least) is now up.  

    BTW, I assume you’re comparing Informa’s tech analyst offering with Gartner?  

    Informa as a whole is pretty much double the size of Gartner ($2bn to $1bn)

  2. Dominic Pannell

    Yup, I’d already linked to your new post, David (see edit above).

    Re: the size of the respective companies, I still need to take the time to read through Informa’s annual report properly to get a better understanding of how the company as a whole is made up, as I mentioned on your post yesterday. I will try to do so before the weekend.

  3. Analysis - Informa buys Datamonitor « Technobabble 2.0

    PingBack from http://technobabble2dot0.wordpress.com/2007/05/17/analysis-informa-buys-datamonitor/

  4. Jonny Bentwood

    My view is slightly more long term. If you consider what the key elements are of a successful analyst business model are, and then apply them to the Informa Group you can see that they ‘potentially’ fare very well.

    1) Research (Informa and Datamonitor have great scale here)

    2) Events (Informa and to a lesser extent Butler have expertise here)

    3) Advisory (Ovum, Butler and [a few Datamonitor analysts] are great here)

    4) Market (Ovum have positioned themselves superbly within the Telco space, DM within Healthcare)

    Obviously success is not guaranteed. Informa must retain the key analysts as well as ensure that they don’t change what works well at Ovum and DM (ie Consulting and Reports). Where does this leave us? I still believe that handled correctly the sheer scale and size of Informa enables them to be a credible competitor to Gartner. In a world where I am regularly hearing the demand to speak to someone else beside Gartner this is a welcome move.

    <a href="http://technobabble2dot0.wordpress.com/2007/05/17/analysis-informa-buys-datamonitor/"&gt;My post</a> backs up this point.

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