TechTarget (NASDAQ: TTGT) made headlines today as the stock surged 11.8% and closed at $39.41 per share following the release of a significant strategic combination with Informa PLC. According to the press release, TechTarget and Informa PLC have entered into a definitive agreement to merge Informa Tech's digital businesses with TechTarget, which will result in the creation of a leading global platform in B2B data and market access.
The combined company, referred to as "new TechTarget," is anticipated to position TechTarget as an end-to-end solution provider across the go-to-market, from strategy, messaging, and content development to in-market activation via brand, demand generation, purchase intent data, and sales enablement. The transaction will entail Informa PLC contributing its Informa Tech digital businesses and $350 million in cash in exchange for a 57% stake in the combined company. This will result in TechTarget shareholders receiving approximately $11.79 per share in cash and retaining a 43% stake in new TechTarget.
Gregory Strakosch, Executive Chairman and Co-founder of TechTarget, expressed confidence in the proposed transaction, stating that it is highly attractive to shareholders as it provides immediate cash value and the opportunity to participate in the long-term value creation of the combined company. Additionally, TechTarget CEO Michael Cotoia emphasized the growing importance of permission-based audiences and first-party data, stating that the combination positions new TechTarget to capitalize on these trends.
Stephen Carter, Informa PLC Group Chief Executive, highlighted the significance of the transaction in strengthening Informa's position in the growing B2B digital services market, creating a platform to serve B2B customers at scale digitally.
The creation of new TechTarget is expected to bring compelling strategic benefits, including enhanced scale across geographies and verticals, expanded total addressable market, and increased product diversification to support all phases of the go-to-market. Furthermore, the combined company is forecasted to have a strong financial profile with significant synergy opportunities, aiming to generate $1 billion in annual revenue within five years of closing.
The transaction is subject to approval by TechTarget shareholders, regulatory approvals, and other customary closing conditions, with the expected closing in the second half of 2024. Following the completion of the transaction, new TechTarget is anticipated to trade on NASDAQ under the ticker symbol TTGT.
The full 8-K submission detailing the transaction is available here.
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (k) | $121,333 | $133,957 | $148,376 | $263,427 | $297,488 | $245,706 |
| Revenue Growth | n/a | 10.4% | 10.76% | 77.54% | 12.93% | -17.41% |
| Operating Margins | 14% | 17% | 15% | 13% | 19% | 4% |
| Net Margins | 11% | 13% | 12% | 0% | 14% | 5% |
| Net Income (k) | $12,955 | $16,875 | $17,068 | $949 | $41,609 | $13,251 |
| Net Interest Expense (k) | -$1,778 | -$691 | -$317 | -$23,275 | $861 | $10,977 |
| Depreciation & Amort. (k) | $298 | $4,703 | $5,946 | $7,535 | $9,976 | $11,752 |
| Earnings Per Share | $0.45 | $0.6 | $0.61 | $0.03 | $1.3 | $0.45 |
| EPS Growth | n/a | 33.33% | 1.67% | -95.08% | 4233.33% | -65.38% |
| Diluted Shares (k) | 974 | 438 | 819 | 1,040 | 4,483 | 133 |
| Free Cash Flow (k) | $18,339 | $33,114 | $45,793 | $69,068 | $76,674 | $59,507 |
| Capital Expenditures | $5,538 | $6,335 | $6,660 | $12,631 | $14,028 | $14,075 |
| Current Ratio | 4.82 | 5.33 | 2.75 | 6.26 | 7.44 | 9.27 |
TechTarget has growing revenues and increasing reinvestment in the business, irregular cash flows, and healthy leverage. However, the firm has weak operating margins with a negative growth trend. Finally, we note that TechTarget has flat EPS growth.
