London, UK, 27 September 2017

Edison issues initiation on The Marketing Group (TMG)

The Marketing Group (TMG) aims to build a major global force in marketing services, a sector characterised by a handful of major holding companies and a large number of smaller agencies. After a rapid initial acquisition phase, an entirely new board took over (Q416/Q117) with more capital markets experience and a steadier expansion strategy. A subsequent portfolio review resulted in three disposals and an impairment charge related to past acquisitions. This should give the group a firm base from which to start building organic, as well as acquisitive, progress. These moves have yet to be reflected in the market valuation.

The shares listed in June 2016 at EUR1.00, reaching EUR9.00 in August 2016. The rapid flow of paper-based deals then contributed to the falling share price, exacerbating the discrepancy between deal prices and market value. The new management team has made sensible moves to bring all under control. The current valuation is yet to reflect these moves or the enhanced growth prospects from the agencies benefiting from being part of a larger group and associated margin expansion.

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