The comparison website GoCompare has agreed to a £594m takeover offer from Future, Britain’s biggest magazines publisher.
The cash-and-shares deal to buy GoCompare, known for its adverts featuring the fictional opera singer Gio Compario, means another huge windfall for GoCompare’s non-executive chairman, Sir Peter Wood.
Wood, GoCompare’s largest shareholder, holds a 29.65% stake in the business, worth almost £170m under the terms of the deal. The cash element will involve a £41m payout to Wood, who will also become a top five shareholder in Future with a stake of about 6%.
Investors in GoCo Group, the parent company of GoCompare, will receive 33p in cash and 0.05 shares in Future, valuing each GoCo share at 136p.
Wood had already made a near-£800m fortune from insurance after founding Direct Line and Esure, which owns the women’s car insurance brand Sheila’s Wheels. GoCompare was spun out of Esure in 2016.
The move marks a further drive into digital for Future, with titles including Country Life, Marie Claire and Metal Hammer, and has a market value of £1.9bn. It already makes significant online income by referring readers of its independent reviews of products to retail partner websites to make purchases.
Under the terms of the deal, shareholders in GoCo Group will own approximately 19% of the new combined company. The board of GoCo has unanimously recommended that shareholders vote in favour of the deal. Future has already received undertakings representing 33.5% of shareholders, including from Wood, committing to the deal.
“In just four years since its demerger from Esure Group, GoCo Group has created significant shareholder value,” Wood said. “I believe the offer, comprised of a significant equity component, provides a compelling opportunity for shareholders to benefit in substantial future value creation.”
Future says it has identified £10m in annual cost savings after completing the deal, which is expected in the first quarter next year.
“We believe that the combination is a unique strategic opportunity to create a wading global specialist media and intent platform,” said Richard Huntingford, the chairman of Future.
Future has been one of few winners in the publishing industry during the coronavirus pandemic. A resurgence of interest in hobbies and crafts during lockdown, as well as entertainment such as live gigs being halted, has fuelled a boom for its stable of brands, which include Total Guitar, Practical Caravan and Real Homes.
The publisher registered an 18,000% surge in online traffic to Golf Monthly from people searching for articles explaining how to create a makeshift course in their back garden during lockdown.
The company published its results on Wednesday, reporting a 300% surge in pre-tax profits to £52m, and a 53% rise in revenues to £339m in the year to 30 September.
Future publishing has been on a buying spree in recent years, with the company seeking to build scale in the ailing magazine market while also moving towards a primarily digital model.
The company cemented its place as Britain’s biggest magazine publisher earlier this year after completing a £140m deal to buy TI Media, formerly Time Inc UK, which publishes 40 titles including NME, Horse & Hound, Woman & Home and Wallpaper.