FTSE 250-listed business publisher and events organiser UBM has reported the receipt of a binding offer from Electra Partners LLP to purchase a portfolio of its Data Services businesses, known as 'Delta', for 160m pounds, including a 40m pound vendor loan note.

According to UBM, Delta represents the bulk of UBM's Data Services segment and includes its health, technology and IP and paper business units.

In 2012, the group reported that the businesses generated revenue of £179.3m and adjusted operating profit of £27.4m.

As of June 30th 2012, UBM reported that the businesses had gross assets of £295.5m.

Commenting on the proposed sale of Delta, David Levin, Chief Executive Officer of UBM, said: "This transaction is a significant strategic step forward for UBM. By divesting Delta we simplify UBM's business, improve the quality of our earnings, enhance our underlying growth rates and remove the challenges inherent in the continued transition to digital data delivery.

"We can now look forward to focusing on further developing UBM as a fast-growing and increasingly profitable events-led, marketing services and communications business."

While the divestment represents a weight off UBM's shoulders, some questioned whether the price paid for the company could not have been negotiated higher.

Steve Liechti, an analyst at Investec, said Delta had been sold for a low price.

"The good news is it[Delta] is going, so management can focus on core Events/PRN [PR Newswires], but the bad news is at a low price and cash received is only £100m."

He indicated that the price paid represented around 5.8 x fiscal year 2012 expected earnings before interest and tax (EBIT), saying: "This looks a disappointing number against our valuation of £180m, but there is an element of relief that the tramsaction has followed through."

Going foreward, Liechti said he expected a 10-15% dilution with pure profit offset slightly by cash and PIK [Price in Kind] interest amortisation.

"Trading update suggests fiscal year 2012 fully diluted earnings per share at 58p versus our 58.1p which looks in line with concensus, so 'ok' with events profit as expected," he stated.

UBM's share price was down 5.8% to 738.50p at 14:31 on Tuesday.

MF

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