buyer: JP Morgan | seller: Veronis Suhler Stevenson | price: $650 million | date: May
takeaway: The largest magazine deal of the year (and second largest b-to-b deal ever) will be worth every penny;if Hanley Wood continues to grow.
The long awaited Hanley Wood sale didn’t disappoint. At $650 million, the sale from Veronis Suhler Stevenson to JP Morgan was the largest magazine deal of 2005 and the second largest b-to-b transaction ever after the $900 million Advanstar sale in 2000.
The Hanley Wood deal came on the heels of VSS selling Canon Communications to Apprise Media and breaking up Chemical Week Associates in 2004, leaving Access Intelligence and a half ownership of Ascend Media as its major U.S. publishing holdings.
JP Morgan took over a company that generates about $225 million in annual revenue and is coming off a five-year period in which it doubled in size from $100 million, primarily through acquisition. The knock on Hanley Wood is the perception that the company’s success has stemmed primarily from riding a freakishly long hot streak in the $600 billion housing and remodeling business. Early indications suggest that market might finally be cooling off in 2006 and Hanley Wood could be facing its first real test in years.
To that end, Hanley Wood has already formed a growth plan dubbed HWX (Hanley Wood Accelerates) to double revenue. "HWX gives us a roadmap for organic growth that takes us to $350 million," says CEO Frank Anton. "To double our current revenue we need to get about $500 million."
The commercial construction market, which contributes only about 15 percent to Hanley Wood’s overall revenue, is a focal point for data products and new niche magazines. The company has three magazine launches planned. In 2004 the company pushed into data with the purchase of $17 million Meyers Group (with plans to grow it to $30 million. "Magazine revenue has grown explosively but the company has grown faster than that," says Anton. "Now we’re much less susceptible to downturns."
comments: Hanley Wood has extremely deep management strength. As long as its markets hold up, it should be a good investment. . . As long as JPM does not meddle, Hanley Wood should continue to enjoy strong earnings moving forward. The next step will be to transform this company into an international player. . . The question is how do they now grow to the next level?
http://www.jpmorgan.com/ | http://www.vss.com/ | http://www.hanleywood.com/ |