United Business Media and Informa, two of Britain’s biggest media companies, confirmed yesterday that they were holding talks on a merger that would create a £3 billion FTSE 100 business information group.

Both companies said that they were in the early stages of working towards a deal. It is understood that United Business Media (UBM), which has a £1.5 billion market capitalisation, approached Informa, which is valued at £1.6 billion, about a merger that would bring together in one publishing empire business titles such as UBM’s Property Week and Informa’s Lloyd’s List, the maritime industry newspaper.

UBM, which is also one of Britain’s largest exhibition companies, said that it “confirms that discussions, which are at an early stage, are taking place . . . regarding the commercial merits of an all-share merger”.

Informa said: “There can be no certainty that any transaction will take place.”

It is thought that UBM would be the senior partner in a new combined company. Sources in Informa indicated that they wanted to be offered a premium for its shares by UBM in any deal.

The negotiations are being led by David Levin, UBM’s chief executive, and Peter Rigby, Informa’s chief executive. It remained unclear yesterday which of the two men would lead the enlarged group, but market insiders suggested that Mr Rigby could be made chairman, a role that he held in Informa until recently, while Mr Levin would be chief executive.

Analysts welcomed the talks, saying that the companies made a logical fit because of their focus on the British business-to-business media market. UBM owns titles such as Music Week and Travel Trade Gazette. Informa is the publisher of titles such as International Freight Weekly.

Informa is thought likely to gain from a deal because it would ease its debt burden, while the merger is considered attractive to UBM because it would help to offset falling advertising sales. Informa generates a greater share of revenue from subscriptions to its publications, data services and events businesses than does UBM.

Some industry observers argue that a deal could be hijacked by a bid for Informa from private equity firms. Informa’s shares have risen in recent weeks after rumours that a number of private equity firms, including Apax and Carlyle, were considering making offers for the company. Informa’s shares closed down 11½p at 386¼p on Friday, while UBM fell 10½p to 605½p.

Other observers suggested that a private equity bid was unlikely, given the problems that private equity firms are having in launching takeover offers because of difficulties in raising debt from lenders in the credit crunch.

However, Lord Hollick, managing partner in Kohlberg Kravis Roberts, the private equity firm, with a brief to look at media and financial assets, is intimately acquainted with the businesses. He retired as chief executive of UBM in April 2005.

Although the companies emphasised that it remains too early to speculate as to whether a deal was likely to be done, it is unlikely that personality clashes will derail the deal. It is understood that the management teams of both companies are open to the possibility of a merger.

A deal would fit a pattern of consolidation within the business information sector in recent months. The magazine publishing unit of Emap was acquired by the Apax private equity firm and Guardian Media Group in January.

Assets under negotiation

UBM

— Owns business titles, including Building, Travel Trade Gazette, The Publican, Farmers Guardian, Property Week, Music Week and Daltons

— Owns CMP Asia and CMP Information, which run conferences and exhibitions with print and online media for the jewellery, leather, fashion, beauty, maritime, pharmaceutical ingredients and furniture industries

Informa

— Owns Lloyd’s List, the shipping and insurance newspaper, and publishes academic journals, commercial data and business books

— Is the world’s largest publicly owned organiser of conferences and courses and runs more than 10,000 events annually

— Paid £500 million last year for Datamonitor, the provider of online information

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