Friday, December 07, 2007

EMAP Dispose of Consumer Titles

After a half year process that at times appeared confused, EMAP announced this morning that they have agreed to sell their consumer magazine and radio business to Heinrich Bauer Verlag KG for £1.14 billion in cash. It appears to represent an excellent deal for shareholders who will receive a special dividend of the proceeds. From the announcement:

Emap has entered into agreements with Heinrich Bauer Verlag KG ("Bauer") to sell Emap Consumer Media and Emap Radio for a total consideration of £1.14 billion on a cash free, debt free basis. This represents a multiple of 2.2x pro forma 2007 revenue and 11.2x pro forma 2007 operating profit and offers a compelling opportunity for Emap shareholders to crystallise value from the two divisions.
Following the sale, the company states that they will refocus intently on their B2B business as a stand alone business. The affirmed that they have terminated any on-going discussions they had with potential acquirers. Clearly, they were not seeing the value here from the prospective purchasers and have decided to carry the unit for the foreseeable time. Some analysts have suggested the advertising outlook for 2008 could be dim and therefore forward financial projections were probably muted.

While Bauer is already big - 166 magazines in 14 countries on three continents and nearly E2.0Billion in revenues - this represents an important expansion for the company. They will immediately gain a substantial position in broader consumer content and english language publishing.

Alun Cathcart, Executive Chairman of Emap, said:

“We are pleased to have achieved a successful outcome in the review of Emap’s Group structure. The price achieved for Emap Consumer Media and Emap Radio fully reflects the value of the two divisions. Emap will now be a focused B2B company with strong market positions, strong cash flow and a proven management team and track record in delivering value and growth.”

Press release

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