Meredith buying Time Inc. for about $1.8 billion

From Wire Reports

 

NEW YORK — Meredith Corp. announced Sunday it is buying Time Inc. for about $1.8 billion, a deal CEO Stephen Lacy called “a transformative and financially compelling growth opportunity” that joins two magazine giants.

Meredith brings with it a magazine portfolio that includes Better Homes & Gardens, Family Circle, allrecipes and Shape, while Time Inc. owns properties including Time, Sports Illustrated, People, Fortune and Entertainment Weekly.

The companies said the deal was unanimously approved by their boards of directors and will close early next year.

Meredith will pay $18.50 per share in cash for Time’s nearly 100 million outstanding shares. It said it is using $3.55 billion in financing commitments from a variety of lenders and a $650 million preferred equity from Koch Equity Development, an investment arm of Koch Industries, to finance the deal and pay down existing debt. Before the announcement, Meredith had just $28 million in cash on hand, according to its latest quarterly report.

Combined, the companies posted $4.8 billion in revenue last year. Meredith expects it will save up to $500 million in costs in the first two years of operation and plans to “aggressively pay down” debt by 2020. Koch Equity Development will not have a seat on the board nor influence editorial operations, the company said.

Time Chairman John Fahey said the sale was in the best interests of the company and its shareholders, noting the price represented a 46 percent premium to the closing price of shares on Nov. 15, the day prior to media reports about the deal.

The news earlier this month of the financial backing from the billionaire Koch brothers sent speculation racing through political and media circles. Charles and David Koch have spent millions of dollars promoting their assertive brand of low-tax, small-government conservatism, and the purchase could afford them an enormous new megaphone alongside – if not necessarily on a par with – the Rupert Murdoch-run Wall Street Journal and Fox TV network.

Like all traditional print publications, Meredith and Time are grappling with ravages of the digital age, working to replace their shrinking print advertising and circulation with ad revenue from online subscriptions, videos, e-commerce and other digital endeavors.

In the first nine months of this year, Time Inc.’s revenue fell nine percent from a year earlier, to $2 billion, led by a 19 percent drop in print advertising.

That struggle has taken its toll on Time’s market value.

 

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