Penton (Prism)

Penton (Prism)

Buyer: Wasserstein & Co., MidOcean PartnersSeller: ABRY Partners/Public StockholdersPrice: $530 millionDate: NovemberTakeaway: Two b-to-b publishers with solid individual brands but poor corporate track records get the chance to start anew.

As 2006 came to a close (and with the $2.4 billion Reader's Digest sale still under the radar), the sale of Penton Media was considered a bellwether for the continuing health of the M&A market. Two high-profile sellers, Cygnus on the b-to-b side and CurtCo on the consumer side, had withdrawn from the market because they weren't getting the bids they wanted.

But then Wasserstein;which had purchased Primedia Business, renamed Prism Business Media, for $385 million in 2005;stepped up in November and paid $194.2 million plus assumption and payment of debt, which put the total value of the deal at $530 million, making it the second largest b-to-b publishing transaction since the $650 million sale of Hanley Wood in 2005.

MidOcean Partners will own 50 percent of the business upon the completion of the Penton merger with Prism Business Media (Penton shareholders approved the deal as Folio: went to press). Wasserstein vice chairman Anup Bagaria and MidOcean Partners managing director Tyler Zachem will serve as co-chairmen of the Prism/Penton entity. Though Wasserstein did not initially announce its partnership with MidOcean, one source had told Folio: that Wasserstein's resources were running low, having put $150 million into Prism and more into Hanley Wood, and thus would need to find a partner to buy Penton.

Wasserstein said it would integrate Penton into Prism, which ignited conversation about which company's name and which company's CEO;Prism's John French and Penton's David Nussbaum;would be retained. Nussbaum had run Penton since 2004, increasing EBITDA dramatically even as revenue remained flat. French had been at the helm of Prism since October 2005, producing growth on both the top and bottom lines.

The sale was also complicated by a deal with Penton's preferred shareholders to share proceeds with common shareholders. Under the plan, the allocation agreement would kick in if the net proceeds exceed $105 million.

By December, those questions were decided. French was named CEO of the new company, with Nussbaum expected to depart after the completion of the deal. The new company will also to take on the Penton brand.

The deal establishes Wasserstein as one of the top three or four players in b-to-b media in terms of revenue. Going forward, the question will be how well two large publishers that have each experienced severe cost-cutting in recent years will adapt to each other.

Comments: Penton got more money than I thought they wouldï¾…It's an intelligent fit, two large, highly diversified businesses. It will be great if they can merge the cultures.

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