Comparison website GoCompare has agreed a £594 million takeover by magazine publisher Future in a move set to net insurance tycoon Sir Peter Wood another hefty windfall.
Future – the UK’s biggest magazine group with titles including Country Life and Total Guitar – will pay 136p a share and offer stock in the combined group, which will see GoCompare investors own around 19% of the enlarged firm.
Sir Peter – who is chairman of GoCompare and its largest shareholder – is in line to pocket around £41.3 million in cash from the deal, which values his 29.7% holding at around £170 million.
He will also become a top five shareholder of Future after the tie-up.
We think Future has its work cut out to prove the deal adds upNicholas Hyett, Hargreaves Lansdown
Future warned over job losses among GoCompare’s 400 staff as it strips out duplication in head office and back office functions to achieve £10 million in cost savings after the deal.
It has committed to keeping GoCompare’s site in Newport, South Wales, but is set to shut a small head office in London’s Soho.
Future owns more than 400 brands and has around 2,300 employees.
GoCompare – known for its adverts featuring opera singer character Gio Compario – said its board has unanimously backed the deal, with 33.6% of shareholders – including Sir Peter – already giving the takeover the thumbs up.
Sir Peter said: “In just four years since its demerger from Esure Group, GoCo Group (GoCompare) has created significant shareholder value while successfully transforming from a UK price comparison website into a technology-led business.
“Future’s market-leading global platform for specialist media and content offers GoCo Group a unique opportunity to materially accelerate its growth plans, reduce customer acquisition costs and increase its addressable market.”
Sir Peter has already amassed a near-£800 million fortune, having founded insurers Direct Line and Sheila’s Wheels group Esure.
GoCompare, which also runs the AutoSave energy deals business, was later spun out of Esure in 2016.
For Future, the deal marks a further step into the digital market and comes after a recent buying spree that saw it snap up Horse & Hound group TI Media – formerly Time Inc UK – earlier this year.
Richard Huntingford, chairman of Future, said: “The combination is a unique strategic opportunity to create a leading global specialist media and intent platform.”
GoCo shares jumped 12% after the deal was announced.
But Nicholas Hyett, equity analyst at Hargreaves Lansdown, described the deal as “baffling”.
He said: “The deal is clearly a positive for GoCo shareholders, at least in the short term, but what it offers Future investors is less clear.
“If investors in Future wanted exposure to GoCo’s AutoSave business they could have bought the shares in the market yesterday, and at a significantly lower price.
“We think Future has its work cut out to prove the deal adds up.”