Deals Advance for Primedia, ALM and Rodale
It’s been a busy week on the M&A front. Two pending blockbusters inched toward a close. Primedia was said to be in the final stages of selling its enthusiast unit and ALM, which went on the block in March, closed its first round of bids Tuesday. Expectations there point to an energetic auction;but not at early price expectations of $750 million. Meanwhile, the New York Post reported that Rodale is unloading Backpacker to former Times Mirror executive and private-equity backed Active Interest Media CEO Skip Zimbalist, and Folio: Alert has learned that this might be an attempt at a quick fix to the Rodale balance sheet.
The sale of Primedia’s 70-magazine enthusiast media division is resting on the final bids of two companies: Wasserstein and Elevation Partners. Sources have focused on Wasserstein as a front-runner with Elevation still in the mix, but another source familiar with the deal says don’t count out billionaire Ron Burkle. "Burkle is still in there," one source said. "I think I’d put my money on him. Wasserstein seems committed already in the media space. I would bet they pull out or don’t make the final cut." However, another source said no one is taking Burkle seriously.
Final bids were due last Friday and the fact there’s been no indication of a clear front-runner save speculation may point to a shaky situation at this point. "There has been a lot of silence. That typically means things are not going well," says the first source.
ALM Sale Expected to Be ‘Frothy’
The sale of ALM, which was announced in March, is on a particularly enthusiastic ride. First-round bids were due Tuesday with one source anticipating a "highly frothy process," that will attract a variety of buyers. "It will attract the larger multi sector funds. It’s one of those things that is going to attract strategics;a lot of potential buyers."
When early expectations of a $750 million asking price went unmet, ALM opened up the sale to a full auction, says a source.
ALM is certainly a high profile, well scaled business, with revenues over $200 million and earnings over $50 million, but several sources are adjusting their sales estimates to the $600 million range, a still-healthy 12X multiple.
Rodale Plugs Up Balance Sheet
Meanwhile, Rodale is reportedly in the finishing stages of selling Backpacker to Active Interest Media, a private-equity backed enthusiast media company led by former Times Mirror Magazines CEO Skip Zimbalist.
A source familiar with the deal told Folio: Alert that there was no auction, that Zimbalist approached Rodale with an offer. The source indicated that, as a special-interest magazine, Backpacker, while in good shape, does not perform at the level of Rodale’s larger titles such as Men’s Health.
Also, the deal, at a reported $14 million, could be providing some cushion for an expected but absent book blockbuster and a substantial loss incurred when Organic Style was shut down in 2005. "They assumed they would be able to come up with a blockbuster every couple of years and they did not do that this year. Plus they took a huge $40 million loss on Organic Style. They need to restore the balance sheet," the source says.
A Rodale spokeswoman declined to comment on the deal.