Market research firm YouGov (LON: YOU) has agreed the purchase of the consumer panel business of GfK for €315m. That should enhance earnings by a mid-teens percentage in the first full year.
AIM-quoted YouGov is issuing 5.57 million shares and brokers are book building. A price has not been announced, but the current share price is 955p, down 35p on the day.
The deal takes YouGov into the consumer market. The EU is forcing GfK to sell this business following the merger with NielsenIQ. In 2022, revenues were €134m and pre-tax profit was €24m. In the year to July 2023, YouGov is expected to report revenues of £265.3m and pre-tax profit of £55.6m.
GfK has consumer panels in 16 European countries and cover more than 100,000 households. Average contract length is three years and two-thirds of the revenues are recurring. There should be initial annual cost savings of £4m.
The plan is to help the acquired business by using the group’s profiling, media consumption and brand data. There are also plans to start consumer panels in the US.
Steve Hatch was announced as chief executive of YouGov in April and he takes over from Stephan Shakespeare on 1 August. He previously worked at Facebook and WPP.
YouGov already has shareholder approval to issue the new shares. The rest of the cost of the acquisition will come from existing cash and debt. Net cash was £41.4m at the end of January 2023 and it will increase by the end of July 2023. Dividends will continue to be steadily raised.
The deal should be completed in the second half of 2023.