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Future shares sink after swoop for GoCompare

·4 min read
Gio Compario
Gio Compario

Shares in the publisher behind Marie Claire, Country Life and Classic Rock have dived in the wake of its £594m offer for price comparison website GoCompare. 

Future has mounted a cash-and-shares takeover of GoCo Group to bolster its strategy of linking its vast readership of specialist titles with digital advertisers and online retailers. 

The move values GoCo Group – the owner of brands such as Go Compare and My Voucher Codes – at 136p a share, a 23pc premium on Tuesday's closing price. 

The takeover has been backed by GoCo chairman Sir Peter Wood, who owns 29.65pc of the price comparison firm, a stake worth £170m based on the deal price.

Sir Peter, who will be handed £41m in cash through the takeover, will also become one of the biggest shareholders in Future with a 5.4pc stake. GoCo shareholders will own about 19pc of the combined business. 

The announcement prompted a mixed reaction from the stock market during afternoon trading, with Future dropping 16pc to about £17 and GoCo surging 10pc to 121p. 

Future said the deal would cut the cost of adding new customers and provide a better proposition for advertisers by creating a “global specialist media platform that drives intent”. 

The combined business would also lead to cost savings of £10m and become a cash-generating machine with “attractive growth”, the publisher added.

Chief executive Zillah Byng-Thorne said Future had always been “a disruptor” and the deal “may not be intuitively obvious to everyone" but created a “significant opportunity”.

She said the company already offered readers price comparison on products through its Hawk technology, but wanted to own a platform that achieved the same results for services, such as broadband and energy. 

Sir Peter and GoCo chief executive Matthew Crummack will step down as part of the deal, with Future’s board remaining in control.

They will be joined by GoCo non-executive director Angela Seymour Jackson. Founder and GoCompare boss Lee Griffin will remain chief executive of the brand, while GoCo finance boss Alan Burns will become chief operating officer of savings.

The move marks the latest in a string of takeovers for Future, which sealed a £140m deal in April for the Horse & Hound and Chat magazine owner TI Media. 

The FTSE 250 company has been hoovering up specialist magazines and websites, stripping out the costs and refashioning them as online-focused titles that guide readers towards buying products from e-commerce websites. 

That strategy has transformed Future into a stock market darling under Ms Byng-Thorne, more than tripling its share price last year to become the best-performing FTSE 350 firm.

Analysis: GoCompare takeover raises questions about Future Publishing’s huge growth through acquisitions 

Zillah Byng-Thorne, the chief executive of Future - David Rose
Zillah Byng-Thorne, the chief executive of Future - David Rose

However, it has also come under fire from some analysts and short-sellers over its £1.7bn market valuation.

Hedge fund ShadowFall launched a blistering attack in February when it published a 68-page report branding Future as “little more than a collection of generally low quality... shrinking assets” and criticised its “self-serving management reward structure".

GoCompare is famed for its adverts starring the rambunctious opera singer Gio Compario and offers price comparison for insurance, credit cards, mortgages and energy and broadband deals. 

The company split from home and motor insurance group Esure four years ago and has been pursuing a strategy based on subscription services. 

Sir Peter said GoCompare’s rivals would not be “happy bunnies" and “will be thinking: ‘Oh my God, this is going to be serious competition’”.

Despite being a non-executive director of GoCo, Ms Byng-Thorne did not take part in assessing or recommending Future’s approach due to the conflict of interest.

The takeover came as Future announced its full-year results, brushing aside the pandemic to lift pre-tax profits from £12.7m to £52m for the year to September. 

Revenues also rose 53pc to £339.6m as digital advertising and e-commerce grew by a respective 23pc and 58pc, offsetting a 43pc drop for its events arm due to lockdown measures. 

Barclays analyst Nick Dempsey said the deal could help drive more traffic to Future’s websites, but it did not look “like a natural combination” due to the “execution risks”.