FOLIO:'s Top Deals of 2007.
BUYER: Bonnier Corporation
SELLER: Time Inc.
PRICE: $225 million
DATE: Closed March 2007
TAKEAWAY: The deal signaled a significant, if seemingly rare, victory for a strategic buyer and created a 40-title consumer-enthusiast powerhouse with more than $350 million in revenue.
â€śFinal outcome may lie in the hands of a strategic.â€ť
That was the tagline for a news story FOLIO: ran in late 2006 during the hotly contested bidding war for Time Inc.â€™s 18 magazines in the Time4 and Parenting groups. And indeed, a strategic buyer had worked its way to the top of the list by January 2007 when Swedish media company Bonnier edged out a stable of bidders said to include Apprise Media, Primedia, Active Interest Media, CurtCo CEO Bill Curtis, and private-equity backed Russell Denson, the former president and CEO of Gruner + Jahr. By March, the deal closed, with all titles going to Bonnier for an estimated $225 million, in the range of the original sale price between $200 million and $300 million. But the deal signaled a significant, if seemingly rare, victory for a strategic buyer and created a 40-title consumer-enthusiast powerhouse with more than $350 million in revenue.
Despite a mix of strategic and private equity-backed bidders, observers gave the strategics the edge. Time Inc.â€™s assets were labeled as profitable, but â€śslow growthâ€ť and potentially difficult for private equity to turn around in a three-to-five year period, the thinking went. â€śThis is a tough deal for private equity-backed bidders to win,â€ť said one source who was involved in the bidding process, and, notably, backed by private equity. â€śThe performance doesnâ€™t support much debt to finance the transaction. Strategics can take a longer view about the turnaround.â€ť
Also helpful at the time was Bonnierâ€™s interest in buying the two groups outright, saving Time Inc. the hassle of chopping up its assets. Time Inc. had not been turning away bids for single titles, but it became apparent that the second-round survivors where those that bid on either the Parenting Group, the Time4 Group, or both. â€śThey indicated very strongly that anything less than one or the other would not initially be considered,â€ťsaid a source.
At the close of the deal, Time4 president Tom Buesse was out and Terry Snow, CEO of World Publications, which Bonnier merged with the Time4 and Parenting groups, was in. Buesse has since reemerged as president and CEO of the Westwood One radio network.
COMMENTS: â€śHistorically, [being a strategic buyer] has been an advantage. But in recent years theyâ€™ve gone to the private equity guys. But in this case, itâ€™s hard to get somebody to come in and change the business substantially in three to five years.