buyer: Lebhar-Friedman | seller: Dowden Health Media | price: $41 million | date: March

takeaway: Lebhar-Friedman diversifies beyond its longtime core markets, but did it make the right choice as a line extension?

The sale of 16-year-old Dowden Health Media to Lebhar-Friedman was an under-the-radar deal involving two of the last remaining family-owned b-to-b publishers. A longstanding relationship between Lebhar-Friedman CEO Roger Friedman and Dowden Health Media founder Carroll
Dowden gave Lebhar the inside track in the transaction.

Dowden was absorbed as a freestanding subsidiary of Lebhar-Friedman and remains at its Montvale, New Jersey, headquarters. All senior Dowden managers will stay in place for a minimum of five years, and founder Carroll Dowden is still with the company. "Dowden appeals for three reasons;we wanted to expand into another area and we liked the medical field," says CEO Roger Friedman. "Two, it’s a well-run company. Three, I’ve known Carroll Dowden and his family for a long time. Their values and culture are similar to ours."

The deal represented a significant expansion for 80-year-old Lebhar-Friedman, which focuses on the retail and food-service space and generates annual revenue of about $80 million. With revenues of approximately $40 million in 2005, Dowden has been growing rapidly with a five-year compound growth rate of 20 percent. It would have been viewed as prime acquisition by one of the large medical media companies.

Dowden Health Media publishes five medical journals and four consumer magazines, as well as newsletters and a continuing medical-education unit. The consumer magazines were a recent initiative for Dowden. Three are regional health and living titles for New Jersey counties, while the fourth is an interior design title.

For Friedman, Dowden represents the chance to offer a complete package to the pharmaceutical community. "We have a big drug property in Drug Store News and now we’re the only publishing company that can offer pharmaceutical manufacturers the chance to reach wholesalers, the drug chains, the pharmacists and the consumers of these drug chains," says Friedman. "We do three custom publications reaching Walgreens, CVS and Wal-Mart. Then through Dowden, they can reach the doctors and consumers again."

comments: Good move for Lebhar-Friedman. They acquired additional management depth and a solid set of assets in a good market. . . We understand LF’s desire to grow beyond the core base, but question this type of move. They paid a large premium to acquire a relatively small player and one that appears off-base in its launch of new regional titles. . . The most surprising deal of the year, but a smart strategy that allows Lebhar to diversify into a high-growth market. |