Onex Corp. is further reducing its stake in Emerald Expositions Events Inc., less than a year after the San Juan Capistrano-based trade show operator completed its initial public offering and started trading on the New York Stock Exchange.
The Toronto-based private equity investment firm and holding company set the price of $18.50 for 6 million shares and offered an additional 900,000 to underwriters BofA Merrill Lynch, Barclays Capital Inc. and Goldman Sachs & Co. The offering will help Onex pull out $106.5 million and reduce its “economic and voting interest” from 74% to about 65%, according to documents filed with the Securities and Exchange Commission.
Since the March 6 announcement of the secondary offering, Emerald’s market value is down 16% to $1.4 billion. It appears to be a part of a calculated exit of the majority shareholder rather than a fire sale.
Emerald posted a 5.6% increase in 2017 revenue to $341.7 million and profit of $81.8 million, which includes a $52.1 million tax credit. It generated 38% of sales from 13 trade shows “focused on a broad range of consumer goods mostly used in and around the home.” Another 18% came from 19 trade shows in the sports sector, including Outdoor Retailer in Denver and Surf Expo in Miami.
The company anticipates a 2018 growth rate of 7.4% to 9.7%, fueled by additional acquisitions, increasing square footage and attendance at its trade shows, and launching more shows in the U.S., it indicated in its S-1 filing with the SEC. It also may “partner with or acquire international trade shows that are complementary to our core business.”
Emerald’s forecast is slightly better than the 7.5% being forecast by companies that make up the U.S. Broadline Retailers Index.
Emerald’s 450 employees work from nine offices. The company competes with Reed Exhibitions, UBM and Informa Exhibitions, and has retained about 2% of the $13 billion market share in the U.S.
Onex, which has $32 billion in assets under management, bought Emerald in 2013 from Nielsen Holdings NV for $950 million. It provided financial backing to help it grow organically and via 15 bolt-on acquisitions totaling approximately $590 million.
The private equity firm made an attempt to unload Emerald early last year for about $2 billion, according to Reuters, but wasn’t satisfied with the offers it received.
The trade show operator filed for an IPO in April, sold 10.3 million shares at $17 per share, and used $159.1 million in proceeds to pay down its debt. Onex sold 7.5 million shares at the same time, generating $144 million, according to the SEC.
Emerald Chief Executive and President David Loechner in a 2016 interview with the Business Journal hinted at the possibility that Emerald might become an acquisition target or “potentially an attractive public company someday.”
He said then that, “Onex has been a great partner of ours. What the eventual exit for them will be at some point will be completely up to them. In my 30-plus years here, we’ve had six different owners.”
