Ziff Davis Owner Officially Seeks Sale
Ziff Davis, as part of an announcement of a strong second quarter, today said that it is "exploring strategic alternatives," which almost certainly means that it will be sold if it gets the price it wants.
The company has retained Evercore Partners and Lehman Bros. as financial advisors. The announcement comes less than three months after chatter began in the financial community (See, Spring Meeting Buzz: Ziff on the Block) that the company had been reaching out to banks seeking bids to manage a potential sale.
A spokesman said the company may be broke apart in a sale. "If we make a deal, it’s possible that one of the groups may be sold off separately or the company may be sold off as a whole," said Randy Zane, speaking on behald of the company. "That is, only if we make a deal, there are no assurances we will."
Private equity firm Willis Stein & Partners bought Ziff in 2000 for $780 million, after the tech publisher was coming off several boom years. However, by the end of 2005, the company carried $357 million in debt and saw revenue drop from $204 million to $187 million. With Willis Stein’s timetable for ownership nearing an end (private equity firms typically sell their properties after three to five years) they’ve decided that the time is right. "Multiples are good," says one financial and investment specialist from a major publishing company. "There’s consolidation. They have a decent position on the enterprise side, and they have built up a good business online. So they have a decision: They can grow or they can sell."
EBITDA Up in Second Quarter of 2006 Meanwhile, Ziff Davis announced that EBITDA grew 84.7 percent to $5.7 million in the second quarter of 2006, up from $3.1 million for the same period last year. The company reported consolidated revenue of $45.2 million. Including closed publications (Sync and ExtremeTech) revenue was down 0.2 percent over last year and flat when excluding those titles. Online revenue jumped 49 percent while print revenue, excluding the closed publications, fell 6 percent compared to the second quarter of 2005.
Zane said the company has no timetable for completing a sale and that the company’s growth will be an asset to the process. "Whatever route we decide to pursue, we’ll have the financial means to continue serving our customers, employees and investors," he said. "Last year was a building year for Ziff Davis. We continued the transformation of the company to a company focused on digital, events and print."
Ziff possesses some of the top tech publishing brands, including PC Magazine, E-Week, Electronic Gaming Monthly, Computer Gaming World, Baseline, CIO Insight and Official U.S. Playstation Magazine. However, print remains a rough road for Ziff’s largest titles. PC Magazine saw revenue drop 16 percent to $58.9 million in the first six months of 2006, according to Publishers Information Bureau.
For the first six months of 2006, revenue fell 2.8 percent to $85.5 million while EBITDA grew 13.9 percent to $8.4 million. As of June 30, the company reported long term debt of $367.3 million. Check Foliomag.com throughout the day for updated information on Ziff Davis.
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