Shares in business media groups Informa and United Business Media (UBM) soared in early trading this morning after merger talks were confirmed that would create a business information group worth around £3.4 billion.

Informa said it was considering an approach from UBM about a possible merger but that there was no certainty a deal would take place.

A merger of the two companies would bringing together business titles such as UBM’s Property Week and Informa’s Lloyd’s List, the maritime industry newspaper.

Shares in Informa rose 11.3 per cent, or 43.75p, to 430p, valuing the company at around £1.8 billion, while UBM shares were up 4.5 per cent, or 27p, to 632.5p, valuing it at around £1.6 billion.

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

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 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 including International Freight Weekly.

Informa is thought likely to gain from a merger because it would ease its debt burden, while the deal 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.

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 several 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 closely acquainted with the businesses. He retired as chief executive of UBM in April 2005.

Although the companies emphasised that it was too early to speculate as to whether a deal was likely to be concluded, 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 merger would fit a pattern of consolidation within the business information sector in recent months. The magazine publishing unit of Emap was acquired by Apax and Guardian Media Group in January.

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