Seeking Alpha

Emerald Expositions Acquires G3 Communications For Retail Expertise

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About: Emerald Expositions Events, Inc. (EEX)
by: Donovan Jones
Summary

Emerald Expositions Events said it has acquired G3 Communications for an undisclosed sum.

G3 provides events and digital content marketing services to retailers and other industry verticals.

With the acquisition, EEX is acquiring an existing partner with a focus on serving retail businesses undergoing rapid changes in marketing processes.

Quick Take

Emerald Expositions Events (EEX) said that it has acquired G3 Communications for an undisclosed amount.

G3 produces the B2B Marketing Exchange event and provides related content and lead generation services.

With the deal, EEX is acquiring G3’s retail event capabilities and year-round publishing and content marketing service offerings.

Target Company

Hasbrouck Heights, New Jersey-based G3 was founded in 1997 to provide brands with conferences and events that are supported by ongoing digital content marketing services.

Management is headed by president Andrew Gaffney, who was previously Group Publisher at Edgell Communications and has an extensive background in the publishing industry.

Below is an interview video/podcast of Andrew Gaffney:

Source: Bob TechConnectr

G3’s primary offerings include:

  • DemandGen Report

  • Retail TouchPoints

  • B2B Marketing Exchange

  • ABM In Action

  • Channel Marketer Report

Market & Competition

According to a 2018 market research report by Marketing Charts with reference to a PwC media outlook report, the US B2B media industry is forecast to grow at a CAGR (Compound Annual Growth Rate) of 2.4% from 2017 to 2022, reaching $16.7 billion as the chart shows below:

The main drivers for this expected growth include the rise in use of ‘big data’ and analytics, social media analysis, and voice search technologies.

Another large segment of B2B media is the trade show and conventions market. The report forecast that trade show market to grow at a CAGR of 4.1% from 2017 to 2022.

Acquisition Terms & Financials

EEX didn’t disclose the acquisition price or terms and didn’t file a form 8-K or provide a change in financial guidance, so the transaction was likely for a financially non-material amount.

A review of the firm’s most recent published financial results indicate that as of September 30, 2019 EEX had $13.6 million in cash and equivalents and $819.4 million in total liabilities, of which $520.8 million was classified as a ‘term loan.’

Free cash flow for the nine months ended September 30, 2019, was $50.7 million.

In the past 12 months, EEX’s stock price has fallen 9.1% vs. the U.S. Media industry’s rise of 13.5% and the overall U.S. Market’s growth of 8.4%, as the chart and corporate events graphic indicates below:

Source: Simply Wall Street

Earnings surprises have been positive in eight of the last twelve quarters, as the chart shows below:

Source: Seeking Alpha

Commentary

EEX acquired G3 for its conference and events as well as its retail publishing brands and lead generation service offerings.

As Johanna Morse, EEX' SVP Creative Group stated in the deal announcement,

We partnered with G3 to bring their Retail TouchPoints Live conference program to Emerald’s RetailX show in Chicago this past June. Customer feedback was extremely positive, and we firmly believe there are significant opportunities to bring G3’s conference programming to many of Emerald’s retail-focused events in the future. Both the retail industry and the broader B2B sector in general are going through dramatic transformations, largely due to shifts in sales channels and changes in buyer behaviors, and G3 can help us to inform and educate our customers so that they are better prepared for these changes.

So, the two firms already had a partnership and the acquisition will bring retail industry events and marketing publication expertise to EEX’ suite of offerings.

By acquiring G3, EEX will be able to scale G3’s events through its existing infrastructure, while gaining G3’s ongoing B2B publishing capabilities as clients seek year-round digital content marketing to support their event participation.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.