Future buys GoCompare

Future PLC (LON:FUTR), the magazine and website publisher, has agreed a 136p-per-share offer in cash and shares for GoCompare price comparison site owner GoCo Group PLC (LON:GOCO).

Future, which also published results for the 12 months to end-September 2020 that were ahead of expectations, said shareholders in its fellow FTSE 250-listed company will be entitled to receive 0.052497 of its shares and 33p in cash, roughly 75%/25% valuing GoCo at £594mln.

The price is a premium of approximately 32.1% to the average price of GoCo shares over the past three months and is above the share price for most of the past two years.

What’s more, GoCo shareholders will own roughly 19% of the combined group once the deal completes.

Explaining its rationale, Future said that “core purpose” of its specialist websites, from Airgun Shooter, Bike Perfect and Celebs Now to Wallpaper, What Hifi and Yachting World, is to “help people to do the things they want by sharing its knowledge and expertise”, with its content now reaching one in three adults in the UK and US.

Combining the two groups will, it said, “significantly strengthen the Future Group’s proposition of seeking to address the growing consumer demand for informed and value-driven purchasing decisions enabled by intent-driven content”.

In a statement, Future chief executive Zillah Byng-Thorne said: “Through the acquisition, we expect to create a leading offering for consumers, providing complementary insights that enable consumers to make informed choices in their passions, interests and key purchasing decisions. The transaction will bring together our depth of audience insight and reach with GoCo’s expertise in price comparison, underpinned by the proprietary technology of both groups.”

Future’s final results showed a quadrupling of profits to £52mln on revenues up 53% to £339.6mln with revenue growth driven by a combination of previous acquisitions and organic growth. A final dividend of 1.6p per share was recommended.

Online audience growth rose 56% to 281.8mln, of which 48% was organic growth.

Overall, organic revenue growth was 6%, with 11% in the first half but just 1% in the second, with media revenue growth of 23%, eCommerce growth of 58% and digital advertising growth of 15%. This offset the impact of event cancellations, which declined organically by 43%.

Future shares, having risen by more than a third since the start of the year, fell 14% to 1,684p by noon on Wednesday, while GoCo was up 9% to 120.4p.

Analysts at broker Liberum said: “While GoCo is not a direct fit into the Future portfolio of assets, which mainly concerns consumer magazines with growth driven by ecommerce advertising revenues, GoCo and specifically the AutoSave division holds many similar characteristics operating as a platform.”

The broker downgraded its recommendation to ‘hold’ from ‘buy’, saying the offer looks “attractive given its 75/25% weighting to shares/cash”.