Acquisition activity is building in the USA with five deals in the last quarter. But I want to focus on two emerging market transactions, which could have significant implications for that country’s overall exhibition business.
Tarsus showed its commitment to developing its business in Indonesia with the acquisition of 51 per cent of PT Infrastructure Asia (PTIA). This follows the launch of a Label Summit and the formation of a joint venture with Dyandra for the launch of an Auto Aftermarket show.
PTIA is currently a small company whose main business is IIICE, an international conference and exhibition focusing on the development of Indonesia’s infrastructure; IFTS, a series of infrastructure related seminars that support IIICE and APSDEX, a high level event for the security and defence industry. PTIA has also launched ITMIT; an exhibition and conference that will co-locate with IIICE and focus on the telecommunications, media and IT sectors.
This latest joint venture is their “hub acquisition” and will be the primary vehicle for the development of their Indonesian business, which will include launches of shows from within their portfolio around the world, as well as targeting the acquisition of further local exhibition businesses.
The proposed scope of the business is evident in the back-ended nature of the purchase. The plan for rapid development of the business is evident in the back-ended nature of the payments for the shares. The overall price for the initial 51 per cent stake is just under US$3m but the value for the remainder is up to a further $20m based on the expected growth in profits over the next three to four years.
Tarsus joins UBM and Reed as the main international entrants into Indonesia and if they scale up in the same way as they have in Turkey, they will become a significant player there.
ITE bought out QInvest’s 28.3 per cent stake in Asian Business Exhibitions and Conferences (ABEC), organiser of 19 exhibitions in India in 11 different sectors including some of ITE’s core areas such as construction, security and oil and gas. The acquisition price was £14m (US$22.1m), which nets down to £10m because of cash in the company and represents a historic multiple of 22 times pre-tax profits for the year ended 31 March 2012. The year profits to March 2013 are increasing, which means that the prospective multiple will be lower but still a double digit one.
There are arrangements in place for ITE to increase its shareholding in the future and although this hasn’t been made clear, we must assume that at these prices, there is some expectation that in time they will be able to hold a majority stake. This is a bold and expensive move for ITE but one that gives them a market leading position in sectors where they have strong leverage. But it is bound to recreate the old problems of unrealistic price expectations from the smaller independent organisers.
This was first published in Issue 1/2013 in EW. Any comments? Email exhibitionworld@mashmedia.net
