The business information sector continues its extraordinary surge with Datamonitor's agreed cash bid at 300p for IT and telecoms research house Ovum at an eye-watering premium 49.6% higher than its previous share price.

The £41.8 million bid values Ovum’s (OVU) forecast 2007 after-tax earnings at an incredible 27 times. Ovum shares rocketed 95.5p to 296p. Datamonitor has already obtained irrevocable acceptances from 39% of Ovum shareholders; a contested bid looks unlikely.

The news follows yesterday’s shock announcement that business information group Informa (INF) and Cinven are big shareholders. Informa’s shares shot up 14%, or 70p to 570p yesterday.

Datamonitor shares were flat at 405.25p on news of the deal. Chief executive Mike Danson denies that he is overpaying.

Ovum sells data to big telecom and IT companies with 70% of sales from steady subscription based services, which Danson claims have a 90% renewal rate. Ovum sales should hit £23.5 million this year.

Danson admits the earnings multiple looks high, but says he is paying under twice sales for Ovum. ‘If you look at Euromoney’s acquisition of Metal Bulletin or the management buy-out at Incisive, you find that these deals are being done at 3-4 times sales.’

He claims that both Incisive and Metal Bulletin had lower levels of recurring subscription income than Ovum.

Datamonitor covers six sectors including IT, but Danson says Ovum adds depth to its IT offering plus top rated coverage of telecoms.