UBM plc today announces that PR Newswire has acquired the outstanding 50% share in its Canada Newswire (CNW) business from the PA Group Limited (PA Group) for cash consideration of £30.1m. Following the transaction, UBM will retain its 17% interest in the PA Group.
Established in 1960, CNW is the leading newswire provider in Canada, distributing approximately 90,000 wire releases per year. It is also the country’s largest investor relations webcast provider and a leading regulatory filing agent. In 2011 CNW generated revenues of £30.8m.
UBM has fully consolidated CNW’s results reflecting its direct and indirect ownership of 58.5%. The acquisition will not directly affect reported consolidated revenue or operating income. The transaction will eliminate the non-controlling interest in CNW profit which in 2011 was £2.3m.
Full ownership will enable PR Newswire to implement an aligned commercial, product development and infrastructure strategy across its North American business. Alignment is expected to result in incremental revenues in Canada by providing customers with access to PR Newswire’s full range of product offerings and by enabling the two organisations to work together in accelerating the trend towards higher engagement products. Cost savings from the integration of the businesses and technology platform are expected to be broadly offset by restructuring costs in the balance of 2012 and 2013. The return on this investment is expected to exceed UBM’s cost of capital in 2013 and subsequent years.
Ninan Chacko, CEO of PR Newswire, said: “PR Newswire and CNW have enjoyed many years of close collaboration. By bringing the two companies together, we will be able to better serve our customers in Canada and around the world. Customers of both companies will see many benefits, not the least of which will be expanded distribution capabilities, social and mobile integration and growth of our multimedia capabilities.
The current management team of CNW will remain in place to drive the integration and capitalise on this revenue opportunity.”
David Levin, CEO of UBM plc, said: “We have enjoyed a long and fruitful partnership with the PA Group. I am delighted to accept the PA’s invitation to join its Board of Directors.”
