The sale of a controlling stake in Argus Media is set to close next week after a two-month delay caused in part by tax issues, including one related to the energy reporting company’s executive chairman.
Adrian Binks, who is also its publisher, is credited with turning what was once a small London-based energy newsletter into an almost £1bn enterprise over the course of the past 30 years.
The sale of a majority stake in Argus, which helps assess global oil prices as well as provides industry data and news, to private equity group General Atlantic in May, underscored the soaring interest in specialist information companies. These companies have thrived while traditional media organisations have struggled with falling circulation and a shift towards digital advertising.
Mr Binks holds a 30 per cent stake in the company comprising both A and B shares, worth roughly £300m in the deal which values the company at about £950m.
After the transaction was agreed, Mr Binks planned to sell £10m of shares and claim relief from UK tax authorities under a special allowance for entrepreneurs. Those who qualify pay less capital gains tax on the sale of all or part of a business.
This partly explains why the deal did not close in July as scheduled.
Even after Mr Binks abandoned the tax allowance idea in August and decided to rollover his holdings, HMRC did not approve the Argus sale, people close to the matter said.
The tax structure of the deal more broadly was a complicating factor. Only when changes, including a proposed final dividend payment to shareholders of more than £15m, was put forward did HMRC give its approval, these people said. Dividend payments are taxed at a higher rate than capital gains.
A few weeks of absence by HMRC’s case officer also contributed to the delay, people close to Argus said.
HMRC, which does not disclose details about approvals and rejections, said: “We don’t comment on identifiable taxpayers or businesses.”
These issues are now resolved and the sale is set to complete on September 30.
“We are delighted to have received all the regulatory approvals for our transaction with General Atlantic, and following approval of a final dividend at today’s board meeting, hope to complete the transaction around the end of the month,” said Mr Binks on Thursday.
Argus was expected to generate earnings before interest, tax, depreciation and amortisation of about £45m in 2016, people close to the company said earlier this year. The deal, therefore, valued the company at roughly 20 times its earnings.
A series of transactions involving financial data and media companies in the past two years provided impetus for some Argus shareholders to sell out, particularly family members of founder Jan Nasmyth, who died in 2008.
The deal will see several of the company’s 180 employee shareholders, including some of its most senior journalists, become multimillionaires from their holdings.
A few dozen are selling their shares and this has added to the delay, as the tax implications for those rolling over their holdings was assessed, according to two people familiar with the matter.
“I am especially pleased that 80 per cent of employee shareholders representing more than 45 per cent of the shares in the new entity have decided to continue on this journey with us. We have a strong team in place,” said Mr Binks.
However, there have been concerns among senior management about the potential departure of staff in recent months, two people close to Argus said.
Ian Bourne, editor-in-chief, left the company at the end of August after selling close to 192,950 shares. Assuming a figure of £23.42 a share, which is what General Atlantic is paying according to people familiar with the matter, he is set to make in excess of £4.5m.
Argus appointed Bank of America Merrill Lynch last year as an adviser and attracted dozens of potential buyers that included several private equity groups.
Argus launched in the 1970s as a weekly newsletter covering the Amsterdam, Rotterdam and Antwerp oil products market. Over the next few decades it expanded into other markets and is now a competitor of S&P Global Platts.
General Atlantic declined to comment.
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