Reuters - Hot Stocks

UPDATE 2-IHS beats profits estimates, drops Solera bid

(Adds CEO comments, details on Solera plans)

By Liana B. Baker and Sai Sachin R

(Reuters) – Business research provider IHS Inc reported better-than-expected quarterly revenue and profit on Tuesday, and said it was not currently pursuing an acquisition of Solera Holdings Inc, sending its shares up more than 6 percent.

The Englewood, Colorado information services firm said it expected full-year profit to come in at the higher end of its earnings forecast.

Reuters, citing sources, reported on Sept. 25 that IHS was preparing to submit an offer for Solera, the software maker that agreed this month to sell itself to Vista Equity Partners Management LLC for $ 6.5 billion, including debt.

“Since the recent speculation is causing uncertainty for shareholders I feel it appropriate to comment that we are not pursuing the acquisition of Solera,” Chief Executive Jerre Stead said on the company’s earnings call.

IHS dropped its plans for a bid after debt markets deteriorated and a decline in its own share price made the deal less attractive, according to sources familiar with the matter who asked not to be identified discussing the deliberations. Solera was looking at possibly raising $ 1 billion in equity for the bid, one of the people added.

IHS declined to elaborate beyond Stead’s comments when asked about the potential offer.

Stead said IHS could pursue some “larger acquisitions” of at least $ 500 million in the industrial and energy research sectors.

SUBSCRIPTION REVENUE

The company’s subscription revenue increased 8 percent in the third quarter, accounting for nearly 80 percent of total revenue.

Subscription revenue from its industrial sector unit, which covers automotive, technology and aerospace research, rose more than 10 percent, Stead said in an interview.

“Automotive was outstanding … the other (industrial) businesses were all very solid,” he said.

However, subscription revenue from energy research fell 3 percent as clients slash spending in response to plummeting oil prices. Energy research is a part of its resources business, which also covers the chemicals industry.

IHS said it expected adjusted profit for the year ending November to be at the higher end of its $ 5.80-$ 6.00 per share forecast given in June.

The company’s net income rose 27 percent to $ 59.2 million, or 86 cents per share, in the quarter ended Aug. 31.

Excluding items, IHS earned $ 1.56 per share.

Total revenue rose 5.7 percent to $ 587.9 million.

Analysts on average had expected a profit of $ 1.47 per share and revenue of $ 579.1 million, according to Thomson Reuters I/B/E/S.

IHS shares rose to $ 111.48 on the New York Stock Exchange. Up to Monday’s close, the stock was down 7.5 percent this year. (Reporting by Liana B. Baker in New York, Sai Sachin R and Lehar Maan in Bengaluru; Editing by Leslie Adler, Kirti Pandey and Bernard Orr)


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