Time4 Sale: Second-Round Bidders Selected
Final outcome may lie in the hands of a strategic.
Six to ten companies have made it into the second round of bidding on the 18 titles in the Time4 and Parenting groups, with notices going out today, sources told Folio: late Tuesday. Second-round bids are due by the end of November. Survivors are said to include Bonnier, Charles McCurdy’s Apprise Media, CurtCo CEO Bill Curtis, and Kelso & Co./VSS-backed Russell Denson, the former president and CEO of Gruner + Jahr.
Final sale price estimates have not changed much, with a price falling somewhere between $200 million and $300 million.
Despite a mix of strategic and private equity-backed bidders, observers are saying strategics will have the edge.
“This is a tough deal for private-equity backed bidders to win,” says one source involved in the bidding process, and, notably, is backed with private equity, “because the performance doesn’t support much debt to finance the transaction. Strategics can take a longer view about the turnaround.”
The magazines are profitable, observers say, but performance has been slipping, which could be a major turn-off for private equity. The ﾑblack book’ buzz says the Parenting group’s 2006 revenues of $90 million represents a percentage drop in the “high teens” from 2005. The Time4Media titles have declined in revenues in the mid-single digits since 2004.
“It’s a profitable business, but it’s a slow-growth business,” a second source says. “Historically, [being a strategic buyer] has been an advantage. But in recent years they’ve gone to the private equity guys. But in this case it’s hard to get somebody to come in and change the business substantially in 3-5 years.”
“We’re in there with the strongest bid we could put together and have our fingers crossed,” says the bidder. “If I were handicapping I’d give the preference to Bonnier and Primedia,” he adds.
Time Inc. had not been turning away bids for single titles but it’s apparent that second-round survivors are those who bid on either the Parenting Group, the Time4 Group, or both. “They indicated very strongly that anything less than one or the other would not initially be considered,” says the second source.
Apprise’s McCurdy is also a front-runner in the Penton sale and at least one observer says he’ll likely stick with Penton, not Time4, if that deal comes through. “[Penton] is a whole business with all the parts, he would be able to keep it as a unit,” says the observer. “I don’t think Y-Visionary has a back office big enough. [Time4] is a bit more complicated.”