ABRY Settles Suit Over F+W Sale
By Marrecca Fiore
Abry Partners has settled its lawsuit against Providence Equity Partners over its acquisition of F+W Publications from Providence last year.
ABRY filed the suit last November, claiming that Providence and F+W grossly misrepresented the financial performance of F+W prior to the acquisition. ABRY paid Providence $500 million in August for F+W, which publishes almost 60 magazines, some 3,000 books under various imprints and owns and operates numerous book clubs.
The company also offers educational programs, conferences and competitions, and maintains free and paid Web services.
In the settlement, which was reached in late May and first reported in Dow Jones’ LBO Wire, Providence agreed to make an investment in F+W alongside ABRY. The amount was not disclosed.
According to the suit, ABRY alleged F+W employed a scheme involving "channel stuffing" where ABRY claimed F+W offered "unprecedented and grossly abnormal discounts" to retailers who sell F+W’s books.
Another alleged irregularity involved an employee in F+W’s magazine division keeping a "second set of financials that reflect "a more realistic accounting" of newsstand revenues, Folio: previously reported.
ABRY also owns Penton Media and Cygnus Business Media, which industry sources say has been recently put on the block. (See Industry Sources Say Cygnus on the Block)
In a memo sent to investors, the firms stated that "there has been an end to the pending litigation, which we believe is a win-win solution and in the best interests of both parties." The settlement "will strengthen F&W and avoid the expenditure of additional finance and human resources to pursue the litigation," the letter said, according to LBO Wire.