Shares in publisher and exhibitions company Informa (INF) are doing the same as tech-darling Micro Focus’ (MCRO) did last week. Not quite gains of 15% but nonetheless bucking tradition to post mild gains despite a chunky £1.2bn acquisition equating to 26% of its own market cap.

One would normally expect an acquirer’s share price to fall when it spends to grow; transactions involve risk of overpayment, the deal might not close or the tie-up might simply be a disaster (like HP’s purchase of Autonomy in 2011). Shareholders are highly confident Micro Focus will succeed in eking the most out of the software assets (mostly Autonomy’s!) it just bought from Hewlett Packard Enterprises. Enviable margins are testimony to its lengthy experience in steadily growing the bottom line and cash-flow rather than focusing on headline revenue growth. As they say in golf, driving’s for show, putting’s for dough.

Today’s Informa announcement, acquiring US-based peer Penton Information Services, is being well received despite being funded by new debt and equity, including a 1-for-4 £715m rights issue at 441p/share (36% discount to yesterday’s close). Investors like the logic of the deal, improving predictability and sustainability of growth and cash flow, and earnings accretive in its first full year.

Falling within the 2014-17 growth acceleration plan aimed at strengthening growth also shows strategy validity. Today’s news offers an avenue for solid stateside expansion (digital, print and exhibitions) to almost half of group revenues from a region it has been focused on for the last few years. Furthermore, should Cable stays where it is an FX translational gain on US earnings post Brexit is an added bonus on top of shares already holding near all-time highs within a steady 2yr uptrend.

Mike van Dulken, Head of Research, 15 Sept