Time could receive renewed look from Meredith following divestitures – sources
07 SEP 2017
- Time UK sale process enters second round
- Leaner Time more digestible for Meredith
Time Inc [NYSE:TIME] could receive another look from Meredith [NYSE:MDP] after the magazine publisher finishes its current round of divestitures, said three sources briefed on previous talks between the companies and a sector advisor.
New York-based Time reportedly engaged Morgan Stanley and Bank of America in late 2016 following an unsolicited takeover offer from a group comprising billionaire investor Edgar Bronfman, Jr and media executives Ynon Kreiz and Len Blavatnik. Meredith, a De Moines, Iowa-based TV broadcaster and magazine publisher, also engaged in talks with Time, but no deal resulted. Instead, on 28 April, Time announced it had decided to stay independent.
Since then, Time has looked to divest non-core assets, including its portfolio of UK magazines and African-American magazine Essence, according to reports. It announced on 27 July that it had successfully sold live events business INVNT to its founding partners.
The sale process for Time UK has entered the second round, a separate source briefed on the situation said. Private equity firms that considered acquiring Immediate Media, a UK magazine publisher, are likely to target the asset. Immediate Media was sold to Hubert Burda Media, the German media company, in January this year for an undisclosed sum.
Potential bidders also include special purpose acquisition companies (SPACs) active in the media space, such as Gloo Networks [LON:GLOO], which are looking to diversify old-fashioned titles away from the traditional print and advertising model, a sector banker said. Gloo Networks, which has backing from Marwyn, an investment firm, considered placing a bid for Immediate Media, according to a press report.
The sector advisor said that completing these divests would be the “minimum” that would be required to make a takeout by Meredith more feasible. This advisor pointed to problems with the sale process early in the year as a continuing barrier, adding that “there are still challenges” in the “state of [Time’s] business” that would make a deal challenging.
New York-based Time reportedly engaged Morgan Stanley and Bank of America in late 2016 following an unsolicited takeover offer from a group comprising billionaire investor Edgar Bronfman, Jr and media executives Ynon Kreiz and Len Blavatnik. Meredith, a De Moines, Iowa-based TV broadcaster and magazine publisher, also engaged in talks with Time, but no deal resulted. Instead, on 28 April, Time announced it had decided to stay independent.
Since then, Time has looked to divest non-core assets, including its portfolio of UK magazines and African-American magazine Essence, according to reports. It announced on 27 July that it had successfully sold live events business INVNT to its founding partners.
The sale process for Time UK has entered the second round, a separate source briefed on the situation said. Private equity firms that considered acquiring Immediate Media, a UK magazine publisher, are likely to target the asset. Immediate Media was sold to Hubert Burda Media, the German media company, in January this year for an undisclosed sum.
Potential bidders also include special purpose acquisition companies (SPACs) active in the media space, such as Gloo Networks [LON:GLOO], which are looking to diversify old-fashioned titles away from the traditional print and advertising model, a sector banker said. Gloo Networks, which has backing from Marwyn, an investment firm, considered placing a bid for Immediate Media, according to a press report.
The sector advisor said that completing these divests would be the “minimum” that would be required to make a takeout by Meredith more feasible. This advisor pointed to problems with the sale process early in the year as a continuing barrier, adding that “there are still challenges” in the “state of [Time’s] business” that would make a deal challenging.
There is no guarantee that renewed interest from Meredith will lead to a formal bid for Time.
News reports pointed to Time’s European pension funds as a source of difficulty in reaching a deal earlier this year. A source previously told this news service that a change in control would lead to European pension liability costs for a buyer equivalent to roughly USD 1 per share.
Reports additionally focused on funding issues for Meredith, particularly that lenders demanded that the company not subsequently split off its television business. Two sources previously told this news service that Meredith received financing proposals from a range of banks, with one source saying that these proposals ranged from around USD 3bn to closer to USD 4bn, but that all lenders had trouble with Time’s eroding operating performance.
The main problem, though, is ultimately that there was an intractable bid-ask spread between Meredith and Time, one of the sources briefed on the matter said. In addition, Meredith contemplated a stock component to its offer, which Time did not find attractive, this source said.
Meredith and Time declined to comment.
News reports pointed to Time’s European pension funds as a source of difficulty in reaching a deal earlier this year. A source previously told this news service that a change in control would lead to European pension liability costs for a buyer equivalent to roughly USD 1 per share.
Reports additionally focused on funding issues for Meredith, particularly that lenders demanded that the company not subsequently split off its television business. Two sources previously told this news service that Meredith received financing proposals from a range of banks, with one source saying that these proposals ranged from around USD 3bn to closer to USD 4bn, but that all lenders had trouble with Time’s eroding operating performance.
The main problem, though, is ultimately that there was an intractable bid-ask spread between Meredith and Time, one of the sources briefed on the matter said. In addition, Meredith contemplated a stock component to its offer, which Time did not find attractive, this source said.
Meredith and Time declined to comment.