Ebiquity Plc (LON:EBQ) has announced the proposed disposal of its Advertising Intelligence (AdIntel) business to Nielsen for £26m (a multiple of 1.2x sales and 5.9x operating profits). The AdIntel business is platform-based and made up the bulk of the group’s Market Intelligence segment. The disposal will allow Ebiquity to focus investment and resources in growing its tech-enabled consultancy practices (MVM and MPO), which have historically been faster growing. The pre-close trading update indicates that after a difficult H117 in the US, progress has been made and growth ex-US has been good. Our forecasts are currently being updated.
The proposed disposal of AdIntel, subject to UK CMA approval, will allow the group to focus its resource on the areas of its business with greatest potential for growth and higher margins, in line with the group’s Growth Acceleration Plan (see our September 2017 Outlook note). The sale proceeds will reduce the pro forma net debt/EBITDA ratio from 2.1x to 1.0x as at end December 2017, facilitating additional investment in enhancing the group’s tech-enabled consultancy offering.
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