Primedia Business Information (Now Prism Business Media)
buyer: Wasserstein & Co. | seller: Primedia Business, Kohlberg Kravis Roberts | price: $385 million | date: August
takeaway: Primedia’s sale of its business division left the shrinking company with only its top breadwinners;enthusiast and consumer guides. Freshly renamed Prism Business Media gives Wasserstein, now a major publishing player, an instant platform for bolt-on deals.
Primedia’s February 2005 sale of About.com for $410 million to The New York Times Co. set the stage for a year of deal-making for the publisher, which culminated in August with the acquisition of the business side of the company by New York-based private-equity firm Wasserstein & Co. for $385 million in cash.
Wasserstein emerged victorious after a more than three-month sales process with a bid that fell short of the $450 million, 12-times EBITDA sales multiple Primedia had reportedly sought. Yet some observers felt that Primedia made out well on the sale. "It’s a great price for Primedia because it’s not a great set of assets," a source with knowledge of the deal said. "They thought they’d get more, but it’s still a pretty good price."
Nevertheless, the sales process hit a bump midway through as Primedia was unable to shake comparisons to the Hanley Wood deal;a blockbuster at $650 million and 14X multiple;which was a tough act to follow. "People are looking at the Primedia quality versus the quality at Hanley Wood and it’s night and day," one source familiar with the sale said at the time.
Concerns ranged from a less-than-robust offering memorandum to a perceived loss of experienced management. Primedia executives dismissed the talk as posturing. "Clearly, buyers are doing what buyers do, which is downplaying interest in the process," said another source.
Primedia Business Information, which was renamed Prism Business Media in December, includes 70 publications, more than 100 Web sites, 25 events and 50 directories and data products.
Primedia Business generated $224.8 million in 2004, up 1.5 percent over 2003. Through September 2005, the unit took in $222 million, relatively flat compared to 2004 figures.
The deal has been a long time coming for Wasserstein. The firm had spent the better part of a year pursuing other A-list publishers, including Thomson and Canon Communications, and came up short. This one puts Wasserstein on a whole new level;other holdings include New York, ALM and The Deal. "What was attractive there was the strong management team," says Wasserstein vice chairman Anup Bagaria (see page 48 for a Q&A with Bagaria). "That was key. We felt with the right capital structure there, which we were able to complete, it would have very attractive cashflows and we felt comfortable with the growth prospects."
comments: This is an excellent platform from which to add more acquisitions. . .It gives Wasserstein a lot of flexibility about properties they can add to what already exists.
http://www.wasserco.com/ | http://www.primediabusiness.com/ | http://www.kkr.com/ |