THE MAN WHO WOULD BE THE CONFERENCE KING

UBM's merger talks with Informa may yet smoke other bidders out, but the deal puts David Levin in sight of realising his ambitions for the firm. By Sarah Arnott

Business Analysis

David Levin, the chief executive of United Business Media (UBM), is negotiating by far the biggest deal of his three-year tenure as he strives towards the goal of turning the company from a sprawling mish-mash of trade newspapers, market research and broadcast interests into a focused business information empire.

The proposed all-share nil-premium merger between UBM and Informa, another business-to-business (B2B) giant, received an enthusiastic response in the City yesterday. Although both companies were at pains to stress the merger talks were at an early stage, UBM's shares went up 2.1 per cent to 618p, and Informa's hit a five- month high, up 13.3 per cent at 437.5p.

Since taking over in early 2005, Mr Levin has presided over nothing short of a reinvention of the company. Anything deemed not to fit into the B2B model has been sold. Exchange & Mart, the consumer bible, went to the US-owned group Newsquest for 50m. The 35 per cent stake in the TV channel Five went to RTL, the broadcaster's joint owner, for 247m. NOP, the market research unit, went to GfK for 383m.

Full-year results for 2007, published in February, show more than 800m returned to shareholders over the three years, but the strategy is not just about selling. Trade publishing is no longer just about magazines, but a package of information services including journals, exhibitions, conferences and websites. With that in mind, UBM has been on a massive spending spree, adding 52 companies to the group's portfolio at a cost of 386m.

The strategy has found favour with shareholders and the City alike. In 2007, revenues grew 8.5 per cent to 802m and pre-tax profits by 14 per cent to 129m. Since 2005, earnings per share has shot up by 80 per cent. UBM is a different company, as Mr Levin himself pointed out earlier this year. "People still think of us as a British magazine company but the UK now represents only 15 per cent of our profit and 23.4 per cent of revenue," he said. "News distribution, data and events businesses represent 80 per cent of operating profit."

Mr Levin is not alone in his decision to build a company offering more diverse services within a narrow field. While the big players may not all have chosen the same destination, all have identified a similar path. Reed Elsevier, pursuing stability, is focusing on its scientific and legal assets because, being electronic and subscription-based, they are seen as more resilient and less exposed to the problems of cyclical advertising spending. The group has already sold off its Harcourt education arm, to Pearson, and has its B2B group up for sale - although the decision to hang on to the more lucrative exhibition business may put off any potential buyers (indeed Mr Levin has dismissed the idea of a UBM bid).

Similarly, Thomson sold off its education business to focus on financial news, hence the merger with Reuters. Pearson picked up Harcourt to consolidate its market-leading position in education publishing. Emap is the most salutary lesson of all. Widely viewed as having lost its way, the 120-year old firm was broken up last year - its B2B arm snapped up for 1.2bn by Guardian Media Group and Apax, its consumer and radio assets bought by H Bauer, the German publisher, for 1.14bn.

The proposed tie-up between UBM and Informa is entirely in keeping with Mr Levin's B2B focus. Informa is the world's largest publicly owned conference organisation and has a publishing portfolio including the famous Lloyds List. The potential synergies between the two groups are considerable and the overlap is limited, obviating competition issues.

"The resulting business is not absolutely compelling but the two parts do have complementary portfolios and it looks like a sensible deal," said Paul Richards, a media analyst at Numis.

Where the proposal is different from UBM's 52 other deals is in its scale. Not only would it be by far the biggest deal in Mr Levin's time, but it would also catapult the combined group into the FTSE 100 and precipitate a possible re-rating of the group's shares. If the deal goes ahead, the combined group is expected to be run by Mr Levin, with Peter Rigby, the Informa chief executive, tipped to become chairman. "David Levin has sold off businesses, reshaped the portfolio and turned down some that would have made the group much larger so this proposal is unequivocally not an ego trip," said Mr Richards.

A more persuasive explanation of the proposal is that it is a question of timing. With a market cap of around 1.6bn, Informa is actually the larger of the two, compared with UBM's 1.5bn value. But a series of acquisitions - not least the 502m purchase of Datamonitor, the market intelligence group, last May - have left investors wary of Informa's debts and the share price has been on the slide.