UK - Emap’s chief executive has dismissed Apax’ zero write-down of its stock as having “zero effect” on its business and is seeking further acquisitions this year.
Private equity group Apax wrote down to zero its investment in Emap’s business-to-business division, which it bought together with Guardian Media Group for £1billion less than two years ago.
With the write-down, Apax is essentially telling its shareholders that Emap is worth less than the bank loan it used to acquire the company.
However, David Gilbertson, chief executive of Emap and former chief executive at Informa, told Exhibition World the write-down has no effect on the company’s future. “It doesn’t have any bearing at all on the business. It’s a technical accounting issue, and both Apax and GMG are happy with our performance. We grew the profitability of the business last year,” he says.
Observers claim Emap has been hit hard by the downturn in advertising spend and the falling numbers at Emap’s major shows, including Spring Fair, Interbuild and GLEE.
Gilbertson remains confident that as the markets return to strength, so too will Apax’s valuation of the company.
“Apax never had any intention of selling Emap in the short term. When they bought the business a year ago it was always going to be a five-year thing and of course what’s happened in the media markets generally is that values have come down as a result of what’s happened in the economy,” he said, adding that there is no profit to be made by selling the company at the moment.
Apax refused to comment on the write down, but sources quoted in the national press said the write-down does not reflect the intrinsic value of Emap.
As for whether the write-down will affect either Apax’s or GMG’s willingness to continue investing in Emap, Gilbertson remains positive. “It absolutely will not affect their willingness to follow through with investment. Apax wants us to grow through acquisition so we will be actively seeking acquisitions and other additions to the business to grow the profit over the next several years, including this one.”