Will Ziff Sell in Parts?
For the first six months of 2006, Ziff’s 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. Even though Ziff has hired two investment banking firms, Evercore Partners and Lehman Bros., to handle the sale of its company, a company spokesman this week there is no intention to sell the company in parts. "We’re exploring all of our options," said spokesman Randy Zane. "That may mean selling off a group or two or it may mean selling it in whole to another private equity firm."
Zane said there is no time table for selling the company even though Ziff CEO Robert Callahan stands to make a $5 million bonus should the company sell before December 2007, according to an 8K the company filed with the Securities and Exchange Commission in June. Other executives likely to qualify for some of the monies place into a "bonus pool" described in the 8K report should one or more parts of the company sell include Jason Young, president of Ziff’s Consumer/Small Business Group, Sloan Seymour, Sloan Seymour, president of the Enterprise Group and Scott McCarthy, president of the Game Group, said another industry source. The executives could qualify to receive one percent of the sale price as bonus should one or more parts of the company sell, the 8K said.
Though Zane stresses Ziff’s second quarter EBITDA increase shows a company on the rebound, some industry sources say the gains may not be enough to bring a likely buyer of the whole company to the forefront. "I’m not sure there is a likely buyer for the Ziff properties, given that Ziff’s markets have declined significantly and there is no sense of a strong rebound," said one industry source this week. "Given this predicament, it is likely that Willis Stein will opt to sell the business off in pieces in order to try to recoup as much of its investment in the business as possible."
Competitors, such as CMP and IDG, which have similar brands in the gaming and technology space may be likely to snap up some Ziff properties, but only if the company is sold in parts, the source said. "IDG does not make large acquisitions, and it is unlikely that they will start now," the source said.
"United Business Media is digesting a number of acquisitions that it made over the past two years, including the acquisition of Commonwealth Business Media for $152 million just last month," the source continued. "Corporate is unlikely going to want to step up and buyout another large portfolio of assets. If Willis decides to sell off the pieces, then it is possible for both IDG and CMP to be interested in some of the properties."