TIDMYOU
RNS Number : 2588F
YouGov PLC
06 July 2023
THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND DOES NOT
CONSTITUTE OR CONTAIN ANY INVITATION, SOLICITATION, RECOMMATION,
OFFER OR ADVICE TO ANY PERSON TO SUBSCRIBE FOR, OTHERWISE ACQUIRE
OR DISPOSE OF ANY SECURITIES IN YOUGOV PLC OR ANY OTHER ENTITY IN
ANY JURISDICTION. NEITHER THIS ANNOUNCEMENT NOR THE FACT OF ITS
DISTRIBUTION SHALL FORM THE BASIS OF, OR BE RELIED ON IN CONNECTION
WITH, ANY INVESTMENT DECISION IN RESPECT OF YOUGOV PLC. PLEASE SEE
THE IMPORTANT NOTICE AT THE OF THIS ANNOUNCEMENT.
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF REGULATION 596/2014 AS IT FORMS PART OF UK DOMESTIC
LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMED
("MAR").
06 July 2023
YouGov plc
("YouGov" or "the Group" or "the Company")
YouGov to acquire GfK's Consumer Panel Business
Extends YouGov's Offering with Established Leader in European
Household FMCG Consumer Insights
Accelerating our strategic vision outlined at the Capital
Markets Day
Delivering mid-teens EPS accretion in the first full year of
ownership
YouGov plc (AIM: YOU) ("YouGov"), the international market
research and data analytics group, today announces the acquisition
of the Consumer Panel Business of GfK SE (the "Consumer Panel
Business") for a headline purchase price of EUR315 million (the
"Acquisition").
GfK's Consumer Panel Business is an established leader in
household purchase data, with panels across 16 European countries,
consisting of over 100,000 households. The Consumer Panel Business
extends the Company's offering into the FMCG sector, with its high
intensity users of market research, and provides an opportunity to
significantly enhance the Group's offering to US clients. The
Consumer Panel Business will strengthen the Group's customer value
proposition and add highly engaged panellists in Europe,
complementary capabilities, and longstanding relationships with
blue chip clients, helping to accelerate the Group's strategic
vision outlined at the YouGov Capital Markets Day on 17 May 2023
.
YouGov will fund the Acquisition through an equity placing of
new ordinary shares expected to raise gross proceeds of
approximately GBP 55 million (representing approximately 4.9% of
YouGov's issued share capital), with the remainder of the cash
consideration financed by a fully committed bridge debt facility
and existing cash on balance sheet. The terms of the placing were
announced separately today.
The Acquisition is subject to customary closing conditions
including any necessary regulatory approvals and works' council
consultations in certain jurisdictions. Completion is expected in
the second half of 2023.
Compelling Strategic and Financial Rationale
-- Extends YouGov's offering into the FMCG sector: The Consumer
Panel Business brings longstanding relationships with a complementary
blue-chip client base in the FMCG sector in which YouGov has,
to date, been underpenetrated.
-- Adds highly-engaged panellists in Europe : GfK's Consumer
Panel Business offers over 100,000 highly-engaged panellists
and rich data assets on consumer household purchases. The
Consumer Panel Business has a presence in 16 countries in
core continental Europe producing household purchase data
representing over 50% of European GDP and over 145 million
consumer households.
-- Enhances YouGov's customer value proposition : Opportunity
to provide a holistic 360-degree view of the consumer by connecting
data from the Consumer Panel Business with YouGov's profiling,
media consumption and brand data.
-- Opportunity to significantly enhance YouGov's US offering
: The Acquisition presents an exciting opportunity to bring
the Consumer Panel Business offering to the US using YouGov
Plus panels and adding expertise in building SKU data product
and barcode catalogue, creation and maintenance of household
samples, and specialist data science to enhance insights.
-- Resilient through-cycle financial profile, growing recurring
revenue share(1) and expanding YouGov's operating profit margins(2)
: The Consumer Panel Business contributes a resilient financial
profile to the Group, with average contract length of 3 years,
99% average gross revenue retention(3) within its largest
segment, and approximately 66% of revenues from recurring
subscription business(4) . The Acquisition is also expected
to enhance YouGov's operating profit margin(2) .
-- Acquisition is mid-teens EPS accretive : The Acquisition
is expected to result in mid-teens EPS accretion in the first
full year of ownership pre-synergies(5) . Additional upside
potential is provided by c urrently identified annual cost
synergies of approximately GBP4 million(6) , further potential
cost synergy realization during integration, and attractive
revenue synergies from cross-sell, upsell and the US expansion
opportunity.
-- Strong Cultural Alignment: YouGov sees strong cultural alignment
between the two organisations given the Consumer Panel Business'
rigorous approach to data, their use of data from highly-engaged
panels, and their deployment of technology to deliver rich
data and insights.
Consideration, Background to the Offer, and Timeline to Completion
-- YouGov plc has agreed to acquire the Consumer Panel Business
of GfK SE in an all-cash transaction for a headline purchase
price of EUR315 million.
-- Implies a sub-10x multiple on a trailing FY2022 EBITDA
basis pre-synergies.
-- The headline purchase price is subject to adjustments
to reflect a cash-free debt-free transaction, and assuming
a normalised level of working capital. The adjustments
are to be finalised using a completion accounts mechanism.
Based on the current estimate of completion adjustments,
the final cash consideration is expected to be lower
than the headline purchase price.
-- The opportunity to acquire the Consumer Panel Business has
arisen because the European Commission has required its divestment
to an independent third party as a clearance condition for
the merger of NielsenIQ and GfK SE announced in July 2022.
-- A transitional services agreement will remain in place
for 12 months following completion of the Acquisition
with an option to extend by an additional 6 months on
two occasions (maximum 24 months) to ensure a smooth
separation and integration process.
-- Consumer Panel Business management will remain with the
business to drive the integration and continued success
of the business.
-- The Acquisition is subject to customary closing conditions
including any necessary regulatory approvals and works' council
consultations in certain jurisdictions. Completion is expected
in the second half of 2023.
-- In the year to 31 December 2022, the Consumer Panel Business
generated revenues of EUR134 million and adjusted profit before
tax of EUR24 million and as of 31 March 2023 had gross assets
of EUR53 million(7) .
Financing & Capital Structure
-- YouGov will fund the Acquisition with a non-pre-emptive underwritten
equity placing of new ordinary shares expected to raise gross
proceeds of approximately GBP 55 million (representing approximately
4.9% of YouGov's issued share capital), with the remainder
of the cash consideration financed by a fully committed bridge
debt facility and cash on balance sheet. The terms of the
placing were announced separately today.
-- The Company expects net leverage at completion below 2x(8)
, with the strong combined cash flow profile de-levering by
approximately 0.5x per annum.
-- The Company's progressive dividend policy is expected to remain
unchanged following the Acquisition.
Morgan Stanley is acting as lead financial adviser to YouGov in
relation to the transaction with Numis acting as NOMAD. Citigroup
is acting as debt provider and financial adviser to YouGov. DLA
Piper is acting as legal adviser and KPMG is providing tax and
structuring advice.
Stephan Shakespeare, YouGov Chief Executive Officer and
Non-Executive Chair Designate, commented :
"We are delighted to be acquiring one of the leaders in European
household purchase data and to be welcoming their employees into
the YouGov fold. The business' approach to data collection and
their geographic coverage are highly complementary to YouGov and we
are fortunate to have been in a position to make this Acquisition,
which brings exciting future growth opportunities.
This transaction is important for us strategically, extending
our offering further into the under-penetrated FMCG sector,
bringing with it long-standing relationships with a blue-chip
client base. We are excited by the future potential of this
combination, as it provides us with the opportunity to super-charge
our customer value proposition by combining one of the richest data
sets on household purchases with YouGov's existing media
consumption and brand data.
We believe this transaction will support YouGov's stated
ambition of becoming the world's #1 market research company ."
Alex McIntosh, YouGov Chief Finance Officer, commented:
"We are thrilled to have the compelling opportunity to acquire
such a high-quality asset and YouGov's strong financial position
has made it possible for us to be agile during the assessment and
transaction process.
Throughout this process we have worked closely with the Consumer
Panel Business management team and have been very impressed with
the foundation they have built. It is clear the management team
share our ethos of using high quality panels and technology to
provide data rich insights to their customers. We are looking
forward to working with them over the coming months to develop
detailed integration plans and achieve our shared vision of scaling
their offering over the next few years under the YouGov Group."
Lars Nordmark, Interim CEO and CFO GfK, commented:
"With YouGov, we firmly believe we have found the perfect future
owner for GfK's Consumer Panel Business and a solution in the best
interests of all parties involved - especially for our clients and
employees."
Enquiries
YouGov plc
Stephan Shakespeare / Alex McIntosh
/ Hannah Jethwani +44 (0) 20 7012 6000
Morgan Stanley (Lead Financial Advisor)
Laurence Hopkins / Dominique Cahu /
Conrad Griffin +44 (0) 20 7425 8000
Numis Securities (NOMAD and Joint
Broker)
Nick Westlake / Iqra Amin +44 (0) 20 7260 1000
Berenberg (Joint Broker)
Mark Whitmore / Richard Andrews / Alix
Mecklenburg-Solodkoff +44 (0) 20 3207 7800
FTI Consulting
Charles Palmer / Emma Hall +44 (0) 20 3727 1000
About YouGov
YouGov is an international online research data and analytics
technology group.
Our mission is to offer unparalleled insight into what the world
thinks.
Our innovative solutions help the world's most recognised
brands, media owners and agencies to plan, activate and track their
marketing activities better.
With operations in the UK, the Americas, Europe, the Middle
East, India, and Asia Pacific, we have one of the world's largest
research networks.
At the core of our platform is an ever-growing source of
consumer data that has been amassed over our twenty years of
operation. We call it Living Data. All of our products and services
draw upon this detailed understanding of our 24+ million registered
individuals to deliver accurate, actionable consumer insights.
As innovators and pioneers of online market research, we have a
strong reputation as a trusted source of accurate data and
insights. Testament to this, YouGov data is regularly referenced by
the global press, and we are the most quoted market research source
in the world.
Important notices
The person responsible for arranging for the release of this
announcement on behalf of YouGov is Alex McIntosh (CFO).
This Announcement is for information only and does not itself
constitute or form part of an offer to sell or issue or the
solicitation of an offer to buy or subscribe for securities
referred to herein in any jurisdiction including, without
limitation, the United States, any other Restricted Territory (as
defined below) or in any jurisdiction where such offer or
solicitation is unlawful. No public offering of securities will be
made in connection with any securities referred herein in the
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or elsewhere. This Announcement is restricted and is not for
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part, directly or indirectly, in or into the United States of
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herein is being made in any such jurisdiction or elsewhere. This
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is it intended to be so approved.
The securities referred to herein have not been and will not be
registered under the United States Securities Act of 1933, as
amended (the "Securities Act"), or with any securities regulatory
authority of any state or other jurisdiction of the United States,
and may not be offered, sold or transferred directly or indirectly
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or in a transaction not subject to, the registration requirements
of the Securities Act and in compliance with the securities laws of
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offering of any securities referred to herein is being made in the
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Persons distributing this Announcement must satisfy themselves
that it is lawful to do so. This Announcement is for information
purposes only and shall not constitute an offer to sell or issue or
the solicitation of an offer to buy, subscribe for or otherwise
acquire securities in any jurisdiction. Any failure to comply with
this restriction may constitute a violation of the securities laws
of such jurisdictions.
No offering document or prospectus will be made available in any
jurisdiction in connection with the matters contained or referred
to in this Announcement and no such offering document or prospectus
is required (in accordance with the EU Prospectus Regulation or UK
Prospectus Regulation) to be published.
Certain statements in this announcement are forward-looking
statements, including with respect to YouGov's expectations,
intentions and projections regarding its future performance,
strategic initiatives, anticipated events or trends and other
matters that are not historical facts and which are, by their
nature, inherently predictive, speculative and involve risks and
uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future. All
statements that address expectations or projections about the
future, including statements about operating performance, strategic
initiatives, objectives, market position, industry trends, general
economic conditions, expected expenditures, expected cost savings
and financial results are forward -- looking statements. Any
statements contained in this announcement that are not statements
of historical fact are, or may be deemed to be, forward -- looking
statements. These forward-looking statements, which may use words
such as "aim", "anticipate", "believe", "could", "intend",
"estimate", "expect", "may", "plan", "project" or words or terms of
similar meaning or the negative thereof, are not guarantees of
future performance and are subject to known and unknown risks and
uncertainties. There are a number of factors including, but not
limited to, commercial, operational, economic, and financial
factors, that could cause actual results, financial condition,
performance or achievements to differ materially from those
expressed or implied by these forward-looking statements. Many of
these risks and uncertainties relate to factors that are beyond
YouGov's ability to control or estimate precisely, such as changes
in taxation or fiscal policy, future market conditions, currency
fluctuations, the behaviour of other market participants, the
actions of governments or governmental regulators, or other risk
factors, such as changes in the political, social and regulatory
framework in which YouGov operates or in economic or technological
trends or conditions, including inflation, recession and consumer
confidence, on a global, regional or national basis. Given those
risks and uncertainties, readers are cautioned not to place undue
reliance on forward-looking statements. Forward-looking statements
speak only as of the date of this announcement. YouGov and its
affiliates, and any of its or their respective directors, officers,
partners, employees, advisers, or agents (collectively,
"Representatives") expressly disclaim any obligation or undertaking
to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise
unless required to do so by applicable law or regulation.
In particular, no statement in this announcement is intended to
be a profit forecast or profit estimate and no statement of a
financial metric (including estimates of EBITDA, profit before tax,
free cash flow or net debt) should be interpreted to mean that any
financial metric for the current or future financial years would
necessarily match or exceed the historical published position of
YouGov and its subsidiaries. The acquisition of the Consumer Panel
Business by YouGov is structured as a carve out transaction. There
is no standalone audited financial information available relating
to the Consumer Panel Business. YouGov's assessment of the
financial performance of the Consumer Panel Business and of the
prospective target margins is based upon unaudited financial
information and projections provided by GfK combined with YouGov's
management assessment of the expected financial performance of the
Consumer Panel Business. The position may be subject to change.
Certain statements in this announcement may contain estimates. The
estimates set out in this announcement have been prepared based on
numerous assumptions and forecasts, some of which are outside of
YouGov's influence and/or control, and is therefore inherently
uncertain and there can be no guarantee or assurance that it will
be correct. The estimates have not been audited, reviewed, verified
or subject to any procedures by YouGov's auditors. Undue reliance
should not be placed on them and there can be no guarantee or
assurance that they will be correct.
This announcement is being issued by and is the sole
responsibility of YouGov. No representation or warranty, express or
implied, is or will be made as to, or in relation to, and no
responsibility or liability is or will be accepted by or on behalf
of YouGov (apart from the responsibilities or liabilities that may
be imposed by the Financial Services and Markets Act 2000, as
amended or the regulatory regime established thereunder) or by its
affiliates or any of its Representatives as to, or in relation to,
the accuracy, adequacy, fairness or completeness of this
announcement or any other written or oral information made
available to or publicly available to any interested party or its
advisers or any other statement made or purported to be made by or
on behalf of YouGov or any of its affiliates or any of its
Representatives in connection with YouGov and any responsibility
and liability whether arising in tort, contract or otherwise
therefore is expressly disclaimed.
Morgan Stanley & Co. International plc ("Morgan Stanley"),
which is authorised by the Prudential Regulation Authority and
regulated by the Financial Conduct Authority and the Prudential
Regulation Authority in the United Kingdom, is acting exclusively
as financial adviser to YouGov and no one else in connection with
the Acquisition. In connection with such matters, Morgan Stanley,
its affiliates and their respective directors, officers, employees
and agents will not regard any other person as their client, nor
will they be responsible to anyone other than YouGov for providing
the protections afforded to clients of Morgan Stanley nor for
providing advice in connection with the Acquisition, the contents
of this announcement or any matter referred to herein.
Numis Securities Limited ("Numis"), which is authorised and
regulated in the United Kingdom by the FCA, is acting exclusively
for YouGov and no one else in connection with the Acquisition and
will not be responsible to anyone other than YouGov for providing
the protections afforded to clients of Numis nor for providing
advice in relation to the Acquisition or any other matter referred
to herein. Neither Numis nor any of its group undertakings or
affiliates owes or accepts any duty, liability or responsibility
whatsoever (whether direct or indirect, whether in contract, in
tort, under statute or otherwise) to any person who is not a client
of Numis in connection with the Acquisition or any matter referred
to herein.
Citigroup Global Markets Limited ("Citi"), which is authorised
by the Prudential Regulation Authority and regulated in the UK by
the Financial Conduct Authority and the Prudential Regulation
Authority, is acting exclusively for YouGov and for no one else in
connection with the Acquisition and will not be responsible to
anyone other than YouGov for providing the protections afforded to
clients of Citi nor for providing advice in connection with the
Acquisition, or any other matters referred to in this announcement.
Neither Citi nor any of its affiliates, directors or employees owes
or accepts any duty, liability or responsibility whatsoever
(whether direct or indirect, consequential, whether in contract, in
tort, in delict, under statute or otherwise) to any person who is
not a client of Citi in connection with this announcement, any
statement contained herein, the Acquisition or otherwise.
1 Revenue derived from multi-year contracts and one-year contracts
expected to renew.
(2) YouGov financials based on audited published financial information
for the 12-month period ended 31 July 2022, GfK financials
based on management estimates and calendarized to July-YE.
Pro-Forma numbers are calculated based on these standalone
figures. The FY2022 operating profit margin for YouGov increases
from 16.4% to 17.8% on a pro forma basis.
(3) Gross revenue retention measures how much of the monthly recurring
revenue is retained each month after subtracting the effects
of churn or downgrades to lower-priced products, but not the
effects of upgrades.
(4) Revenue derived from multi-year contracts and one-year contracts
expected to renew.
(5) EPS accretion calculated using the pro-forma financials based
on standalone financials of YouGov (based on analyst consensus)
and calendarized financials of GfK CPB based on management
estimates.
(6) Based on YouGov management estimates.
(7) Financial information is based on unaudited financial information
provided in relation to the Consumer Panel Business which has
been assessed by and on behalf of YouGov.
(8) Net leverage calculated by dividing proforma net debt by Adjusted
EBITDA (YouGov values based on analyst consensus (July-YE),
including related acquisition financing, and Consumer Panel
Business values based on management estimate calendarized to
July-YE).
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