Kable Media Services Inc. unit of Amrep Corp. will buy Palm Coast Data Holdco Inc. for about $92 million, CM learned yesterday. Kable and Palm Coast clients received the news about the acquisition in the form of an email.
Kable plans to finance the acquisition using a combination of internal funds and borrowings. The deal is expected to close in early 2007, subject to regulatory review and other customary closing conditions.
Sources close to the story say that John Menough, president of Palm Coast, will probably head the new joint company. Sources also note that the SEC may become involved in the acquisition due to the size of the companies and their position as two of the top players in the fulfillment services industry.
Industry consultants say they are not surprised that consolidation like this would occur when so much investment is needed to upgrade existing systems and stay ahead of the curve in this fiercely competitive marketplace. Yet most publishers have not wanted to partner with their fulfillment companies on enhancements, but rather prefer to negotiate lower prices.