M&A Scorecard – September 2007
Hearst checks in this issue with its second online-related acquisition in two weeks, buying social shopping site Kaboodle. Hearst’s earlier deal, $150 million for UGO.com, is differentiated by its content focus. The Kaboodle deal involves social networking functionality designed to enhance content.
|Emmis Publishing||Orange Coast Kommunications||N/A||N/A|
The deal behind the deal: Indianapolis-based Emmis Publishing, a wholly-owned subsidiary of Emmis Communications, has purchased Orange Coast Kommunications, publisher of Orange Coast.
With a circulation of about 60,000 and 26 employees, Orange Coast covers the community of Orange County, California. Emmis Communications publishes a number of city and regional titles, including Atlanta and Texas Monthly. Regional magazine brokerage firm Regional Media Advisors represented the seller in the deal.
In particular, Emmis sees cross-over opportunities with its Los Angeles and Tu Ciudad Los Angeles magazines. “We think there are some interesting possibilities that exist with our ownership of Los Angeles magazine and Tu Ciudad Los Angeles that make this acquisition particularly intriguing,” said Gary Thoe, president of Emmis Publishing, in a statement.
Our panel says: “They paid a fair market price. The magazine is very profitable and Emmis recognized that profit. Emmis looks for properties in growing markets that align with others they have and which can be used to cross-sell.”
|Buyer||Seller||Sale Price||Revenue Multiple|
|CMP Technology||Semiconductor Insights||$26 million||1X|
The deal behind the deal: CMP continued its series of acquisitions, spending $26 million to acquire Ottawa, Ontario-based Semiconductor Insights, a media and consulting services company targeting the semiconductor industry. Revenues for the company are $23 million.
SI’s basic product offerings include a database of 5,000 reports of “teardowns” (reverse engineering of various electronic products with semiconductors) and an array of consulting services.
The sale price will include another $8 million of deferred compensation tied to future performance. The 160-person company will remain in Ottawa and will be housed under CMP’s Technology Innovators Group, reporting to group president Paul Miller.
Our panel says: “That’s a good fit for CMP. The database of reports alone is valuable in that it can be used across a variety of platforms.”
|Hearst Corporation||Kaboodle||$40 million est.||N/A|
The deal behind the deal: Hearst, publisher of Esquire, Cosmopolitan and Town & Country, among others, acquired Kaboodle Inc., a social networking and shopping community site that gets two million unique visitors a month.
The sale price has been reported at around $40 million, and it’s the second online acquisition by Hearst in two weeks. The company spent approximately $150 million on UGO.com, an entertainment content site for the 18-to-34-year-old male demographic, in late July.
Kaboodle will become a wholly-owned subsidiary of Hearst and will be jointly managed by Hearst Interactive Media (the company’s internal new media investment division) and the Hearst Magazines Digital Media unit.
Our panel says: “That’s more of a technology buy for Hearst. They’re after the social networking features which they can replicate across their content sites.”
|Buyer||Seller|| Sale Price
|| Revenue Multiple
|Alta Communications||HMP Communications||$25 million est.||N/A|
The deal behind the deal: Former Cygnus Business Media executives Paul Mackler and Ken Fisher have formed a partnership to acquire medical information provider HMP Communications from BG Media Investors.
Mackler, who most recently was CEO of Cygnus, will assume the role of president and CEO of HMP Communications, which derives half of its revenue from print advertising. The company provides peer-reviewed products, journals, online information, symposia and exhibitions, among others.
Mackler and Fisher—previously CFO of Cygnus—partnered with Boston-based private equity investment firm Alta Communications for the acquisition. Alta already has investments in b-to-b media, including Babcox Publications and 1105 Media. GE Capital provided financing for the deal. BG Media Investors was represented by Berkery, Noyes & Co.
Our panel says: “This is a good deal. It gets them back in the game with a nice platform that they can add to through acquisitions. Interesting part is that they haven’t been in healthcare publishing before, so this is new territory.”
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