5 August 2021
Daily Mail and General Trust plc ('DMGT')
Agreement to sell RMS
DMGT announces that it has agreed the sale of RMS, its Insurance Risk business, to Moody's Corporation, a global integrated risk assessment firm, for approximately £1,425m in cash at completion.
Paul Zwillenberg, CEO, commented: "The sale of RMS marks another major milestone in DMGT's transformation. It is the culmination of our strategy of investment in businesses combined with active portfolio management. Organic investment in RMS's software, data, data analytics, models and applications has created substantial shareholder value, particularly over the last few years as the team has delivered the accelerated product development programme. The deployment of Risk Intelligence, the world's first SaaS¹ unified catastrophe model and analytics risk platform, was the achievement of a major milestone.
Consistent with our objective of delivering compelling returns for our investors, we have decided that now is the right time to monetise our investment in RMS at a premium valuation. Moody's is ideally positioned to drive the next stage of RMS's growth and deliver revenue synergies. The addition of RMS will help accelerate Moody's strategy of developing an integrated risk assessment platform that will enable customers to make better decisions and build resilience. The transaction represents a great opportunity for RMS's employees, as well as for both businesses' customers."
Terms of sale and possible net cash proceeds
The purchase price is in line with DMGT's expectations at the time of the announcement on 12 July 2021 of a possible major reorganisation of the Group (the 'Reorganisation Announcement') and is subject to certain closing adjustments. The sale of RMS is expected to complete in September 2021, subject to satisfaction of customary closing conditions, including regulatory clearance under the Hart-Scott-Rodino Act in the US. Completion of the sale will satisfy one of the pre-conditions² of the possible offer ('Possible Offer') by Rothermere Continuation Limited ('RCL') for DMGT set out in the Reorganisation Announcement, which can be found at www.dmgt.com/investors.
As a result of the sale of RMS, DMGT expects to incur aggregate costs of approximately £210m in respect of RMS minority shareholders, incentive plans for RMS employees³, tax charges and disposal fees. In addition, as the sale will involve RMS's retirement as a guarantor in respect of one of DMGT's pension schemes, a payment currently estimated to be approximately £60m will be made into an escrow account in respect of that scheme. Beyond that, DMGT has contractual obligations⁴ to the pension schemes, of which the largest scheme is in actuarial deficit as measured on a technical provisions basis. The Group fully intends to honour its obligations and is currently in discussions5 with the pension scheme trustees ('Trustees') in relation to the impact of the proposed reorganisation of DMGT. The outcome of those discussions will be material in the context of the Possible Offer and reaching a reasonably satisfactory position with the Trustees would satisfy a further pre-condition of the Possible Offer.
Pending conclusion of the discussion with the Trustees, it is not possible to be definitive about the exact amount of the cash component of the conditional special distribution under the possible reorganisation, but the agreed sale price of RMS is as expected and the current broad estimate of approximately 610 pence per share remains unchanged.
Additional information
In the 12 months to 31 March 2021, RMS generated £33m adjusted operating profit and £38m EBITDA6 from revenues of £242m.
Lazard & Co., Limited is acting as sole financial adviser to DMGT in relation to the disposal of RMS. Slaughter and May and Cravath, Swaine & Moore LLP are acting as DMGT's legal advisers in relation to the disposal of RMS.
For further information
| For analyst and institutional enquiries: | |
| Tim Collier, Chief Financial Officer | +44 20 3615 2902 |
| Adam Webster, Head of Investor Relations | +44 20 3615 2903 |
| | |
| For media enquiries: | |
| Doug Campbell, Teneo | +44 7753 136628 |
| Paul Durman, Teneo | +44 7793 522824 |
Market Abuse Regulation
The information communicated in this announcement includes inside information.
About DMGT
DMGT manages a portfolio of companies that provide businesses and consumers with compelling information, analysis, insight, events, news and entertainment. The Group takes a long-term approach to investment and has market-leading positions in consumer media, insurance risk, property information and events & exhibitions. In total, DMGT generates revenues of around £1.2bn.
About RMS
RMS's solutions help insurers, reinsurers, brokers, financial markets and public agencies evaluate and manage catastrophe risks throughout the world. RMS leads the catastrophe modelling industry that it helped to pioneer, delivering models, data, analytical services and software to its customers. Customers trust RMS's solutions to improve their understanding and manage the risks of natural and human-made catastrophes.
| Person responsible for arranging the release of this announcement: | |
| Fran Sallas, Company Secretary | +44 20 3615 2904 |
Notes
1 Software as a service.
2 The possible offer for DMGT by RCL is subject to the following pre-conditions:
a) completion of confirmatory due diligence by RCL to the satisfaction of RCL;
b) RMS Completion;
c) Cazoo Completion; and
d) reaching a position with the trustees of DMGT's three pension schemes which is reasonably satisfactory to DMGT and RCL to ensure that the pension schemes are not adversely affected by the Reorganisation process and, in particular, by the settlement of the Special Dividend.
The pre-condition under (a) is waivable at the option of RCL. Pre-conditions under (b), (c) and (d) are not waivable. The terms used under this note 2 have the definitions assigned to them under the Reorganisation Announcement.
3 For more information about RMS option plans, please see note 42, 'Share-based payments', in DMGT's 2020 Annual Report.
4 DMGT has an existing contractual arrangement with the trustees of the Harmsworth Pension Scheme (HPS) and Senior Executive Pension Fund (SEPF) that if DMGT makes a special distribution payment then it shall pay an amount equal to 20% of the distribution into the HPS up to the amount of any deficit in the HPS calculated on the HPS technical provisions basis, as shown in the most recent HPS valuation report or actuarial report, and if there are funds remaining after that payment then a payment must be made to the SEPF up to the amount of any deficit in the SEPF calculated on the SEPF technical provisions basis, as shown in the most recent SEPF valuation report or actuarial report, with any amount left over after these payments ceasing to be payable. For more information about DMGT's pension schemes, please see note 35, 'Retirement benefit obligations', in DMGT's 2020 Annual Report.
5 These discussions will take account of the enhanced Pension Regulator powers that will apply from October 2021 to deter adverse treatment of pension schemes. New funding requirements will also apply to DMGT schemes when Part 3 of Pensions Act 2004 comes into effect with increased focus on appropriate long-term funding targets.
6 EBITDA excludes the depreciation of property, plant and equipment and the amortisation of intangible assets not arising on business combinations.
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