Primedia's Enthusiast Media Division (including motorcycle magazines Motorcyclist, Dirt Rider, Sport Rider, Motorcycle Cruiser) has been sold to Source Intelink Companies, Inc.
Here's the release:
Bonita Springs, FL, May 14, 2007 - Source Interlink Companies, Inc. (NASDAQ: SORC), a leading provider of merchandising and fulfillment services for home entertainment products, is pleased to announce that it has signed a definitive stock purchase agreement to acquire
PRIMEDIA Inc.'s (NYSE: PRM) Enthusiast Media division (EM) for approximately $1.2 billion.
The all-cash transaction combines EM's industry-leading magazine content portfolio, containing over 70 magazine titles and 90 Web sites, with Source Interlink's premier magazine distribution and merchandising platform, creating a leading vertically integrated media, publishing, merchandising and distribution company.
To fund the acquisition, Source Interlink has secured a financing commitment from Citigroup Global Markets, Inc.
EM is one of the largest providers of print and digital media content to the enthusiast community, with more than 70 magazine titles, 90 Web sites, over 65 events, a television program, and 400 branded products. It is the #1 special interest magazine publisher in the U.S., and its portfolio of well-known niche magazine titles and content brands includes: Motor Trend magazine, Automobile magazine, Hot Rod magazine, Lowrider magazine, Soap Opera Digest and Soap Opera Weekly magazines, Power & Motoryacht magazine and, Surfer and Snowboarder magazines.
For fiscal year 2006, EM had revenues of $524.8 million. Source Interlink estimates that the combined companies generate approximately $2.4 billion in revenue and more than $180 million in EBITDA on an annualized basis. Source Interlink expects the transaction to be accretive to adjusted earnings per share exclusive of one time costs.
The transaction is expected to close mid-summer, and is subject to regulatory approvals and other customary closing conditions. Following the completion of the transaction, EM will operate as a division of Source Interlink and will be headed by Steve Parr, EM's current president. He will report to Michael Duckworth, Chairman of Source Interlink.
Michael Duckworth commented, "Our review of strategic alternatives is complete and our direction is clear. Over the last several years Source has driven the consolidation of a fragmented and inefficient channel for the distribution and merchandising of home entertainment content at retail and the newsstand. 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. EM's industry-leading special interest magazine titles and consumer Web sites diversifies our earnings streams and accelerates our growth. Under the leadership of Steve Parr, EM has developed a strategy for growth that capitalizes on the changes taking place in the media environment. We welcome Steve and his team to Source and we look forward to building on the solid foundation they have created."
"We are delighted with the end result of this process," said Dean Nelson, CEO of PRIMEDIA. "We are able to emerge from this auction virtually debt free and completely focused on our Consumer Source business. At the same time, we believe that Source Interlink will be a terrific home for our Enthusiast Media Group and will continue to thrive under their ownership. We thank the EM team for their hard work and commitment and we wish Steve Parr and the entire team all the best."
