M&A Scorecard – May 2006
M&A deals are off to a strong start again this year, according to media bankers Jordan, Edmiston Group, which tracks deals across 11 media categories. In a recently released report on first-quarter M&A action, the number of deals has increased 8 percent to 168, with deal value leaping 35 percent to $14.6 billion. Private equity is expected to play an even greater role this year, representing between a third and a half of all deals.
The deal behind the deal: Strategic online plays are still being picked off by traditional publishers, evidenced by Reader’s Digest Association’s $66 million acquisition of eight-year-old Allrecipes.com—a cooking site that has 1.8 million registered members and makes its revenue through advertising sponsorships and retail licensing. RDA expects the site to contribute about $4 million of EBITDA in the first year.
The purchase is RDA’s first major Internet acquisition and is planned to function as a portal for the company’s food-related print properties and Web sites such as Taste of Home, Light & Tasty and Everyday with Rachael Ray.
Our panel says: “That [EBITDA multiple] is not high for these dotcom buys. People expect a lot of growth from these Web-based businesses.”
“It seems really rich. Reader’s Digest has for a number of years been desperately trying anything that would prevent further erosion of their top line. They need to continue to reach out to a younger market.”
The deal behind the deal: Charles McCurdy’s Apprise Media bought another enthusiast media company. The Action Pursuit Group purchased Concord, California-based car and truck enthusiast publisher DRIVE! Media. The titles will be folded into Apprise’s existing group of auto tiles, which include Drag Racer and Drifting. AJ Lawler Partners represented DRIVE! in the deal.
Craig Nickerson, Action Pursuit Group CEO, said in a statement, “We intend to expand DRIVE!’s marketing footprint across the country with the launch of regional editions and expanded online offerings.”
Our panel says: “That’s a natural fit. He’s building a nice stable of publications.”
“There are a number of components that complete the enthusiast cycle, and one of those is getting people to go to these auto activities and getting them to buy, which is what the DRIVE! titles do. [McCurdy] has the other titles and this completes the picture.”
Buyer: CurtCo Publishing
Seller: Trans World Publishing
Sale Price: $4 million est.
Revenue Multiple: 1X
The deal behind the deal: CurtCo, publisher of Robb Report and other titles targeting the affluent, purchased the assets of Art & Antiques from Atlanta-based Billian Publishing’s Trans World Publishing division. Assets include the 105,000 paid circ magazine, art show ARTscottsdale and a custom publishing division that serves galleries and art shows.
As a result of the purchase, CurtCo has formed an Art & Antiques division, which will be headed up by Dan Denton, president of the Gulfshore division.
Our panel says: “The family owned it for a long time. It wasn’t a fit for their other products.”
“The market is good and they felt like they could probably get a good price for it.”
Buyer: 1105 Media
Sale Price: $74 million est
EBITDA Multiple: 10.5X
Buyer: 1105 Media
Seller: Stevens Publishing
Sale Price: $30 million est.
EBITDA Multiple: N/A
The deal behind the deal: After a four-month delay, the sale of 101communications to newly-formed 1105 Media closed mid-April. The $53 million 101, backed by private equity firm Frontenac Co., was sold to two other private equity firms—Boston-based Nautic Partners and Alta Communications. Outgoing CEO Jeff Klein will stay on as chairman of the new company. He will retain an ownership stake and serve in a non-executive, part-time role.
New York-based media bankers Jordan Edmiston Group represented 101communication’s shareholders in the deal.
Almost simultaneously, 1105 announced its acquisition of Stevens Publishing, a Dallas-based publisher specializing in the health and safety markets. With this acquisition,
1105 Media has revenue of $75 million and about 250 employees. New York-based DeSilva & Phillips represented Stevens in the deal.
Our panel says: “Neal and Nautic have been looking for a deal together for at least two years. The Stevens deal was rumored about three months ago.”
“I think 1105 viewed 101 as a good ‘platform’ from which it could expand with add-on acquisitions. They appear poised to build a diversified b-to-b magazine, events and Internet business. I would expect to see additional acquisitions in new markets.”
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Submit M&A related tips and news to senior editor Bill Mickey at firstname.lastname@example.org.