_________________
Source Interlink Cos. has agreed to pay about $1.2 billion for the enthusiast media business of Primedia Inc...
that the company said in February it might sell.
The all-cash deal is nearly double $659 million market capitalization Primedia had as of Friday's close on the New York Stock Exchange. Private-equity firm Kohlberg Kravis Roberts & Co. owns about 60% of Primedia.
In premarket trading, shares of Primedia surged 20% to $3, while Source Interlink gained 6.6% to $7.25.
The deal, scheduled to close midsummer, includes more than 70 magazines and 90 Web sites such as Motor Trend and Soap Opera Digest. The operations had 2006 revenue of $524.8 million. Its current president, Steve Parr, will remain in charge of the enthusiast media business.
Bonita Springs, Fla., Source Interlink, which had a $355 million market cap as of Friday and whose operations include magazine, CD and DVD distribution, has lined up financing from Citigroup Inc. for the acquisition.
Source Interlink Chairman Michael Duckworth said the company during the past several years "has driven the consolidation of a fragmented and inefficient" segment. "This acquisition is a first step to leverage what we have built by transforming Source into a fully integrated media company with both print and digital content," he added.
Primedia Chief Executive Dean Nelson said, "We are able to emerge from this auction virtually debt-free and completely focused on our Consumer Source business." Those operations produce free publications such as Apartment Guide and Auto Guide.
Source Interlink's founder, S. Leslie Flegel, resigned as chairman and CEO in November.
_________________
Here's a related story from Bloomberg.com and also here at Winding Road.
The all-cash deal is nearly double $659 million market capitalization Primedia had as of Friday's close on the New York Stock Exchange. Private-equity firm Kohlberg Kravis Roberts & Co. owns about 60% of Primedia.
In premarket trading, shares of Primedia surged 20% to $3, while Source Interlink gained 6.6% to $7.25.
The deal, scheduled to close midsummer, includes more than 70 magazines and 90 Web sites such as Motor Trend and Soap Opera Digest. The operations had 2006 revenue of $524.8 million. Its current president, Steve Parr, will remain in charge of the enthusiast media business.
Bonita Springs, Fla., Source Interlink, which had a $355 million market cap as of Friday and whose operations include magazine, CD and DVD distribution, has lined up financing from Citigroup Inc. for the acquisition.
Source Interlink Chairman Michael Duckworth said the company during the past several years "has driven the consolidation of a fragmented and inefficient" segment. "This acquisition is a first step to leverage what we have built by transforming Source into a fully integrated media company with both print and digital content," he added.
Primedia Chief Executive Dean Nelson said, "We are able to emerge from this auction virtually debt-free and completely focused on our Consumer Source business." Those operations produce free publications such as Apartment Guide and Auto Guide.
Source Interlink's founder, S. Leslie Flegel, resigned as chairman and CEO in November.
_________________
Here's a related story from Bloomberg.com and also here at Winding Road.
estreka says:
04:08 PM, 05/14/07
I can't say it was a good investment, but it's hard to argue with the price. That's a lot of talented writers and loyal subscribers for $1.2 billion.
ateixeira says:
09:54 AM, 05/15/07
Not long ago Primedia was expanding, buying things up. I'm surprised to see this.