The New York Times Company has reached an agreement to acquire About, Inc. from PRIMEDIA in an all-cash transaction valued at about $410 million.
The acquisition is subject to customary regulatory approvals and is expected to be completed late this quarter or early in the second quarter.
“We are very excited about this acquisition, which furthers our strategy of delivering news and information to local and national audiences with multiple media products,” said Janet Robinson, president and CEO, The New York Times Company. “Primedia and About’s management team, led by Peter Horan, have successfully transformed About into a popular and profitable business. The global reach of About.com and opportunities for cross-promotion between its channels and our digital properties will be additive for both businesses. With the Times Company behind it, About.com is poised to grow even further, benefiting The New York Times Company and its shareholders.”
The Times Company expects strong revenue and profit growth for About. According to Primedia, the purchase price of $410 million reflects a multiple of over 10 times About, Inc. 2004 revenues and a multiple of over 30 times About, Inc. 2004 segment earnings before interest, taxes and depreciation (EBITDA). Based on Times Company projections, the transaction price reflects a multiple of 23 times estimated 2005 EBITDA. The Times Company expects the acquisition to be accretive to earnings in 2007 and will be structured as a cash for stock purchase. For tax purposes, the Company plans to treat the acquisition similar to an asset purchase, leading to tax deductions worth over $80 million.
“The sale of About.com is a material deleveraging transaction that significantly strengthens Primedia’s balance sheet,” said Kelly P. Conlin, Primedia’s president and chief executive officer. “Because About.com is completely distinct from Primedia’s other Web sites, its sale enables us to further focus on growing the online extensions of our outstanding portfolio of targeted brands reaching highly-engaged, high-value audiences.”
Under Times Company ownership, About will operate as its own distinct business division. The Times Company expects to enhance and expand the About.com content offering and improve the visibility of the About.com brand name. The Times Company also expects to market its products to the vast About.com user base.
“About.com’s network of guides is an efficient and extensible content model that has developed a strong user base among enthusiasts and others interested in particular subject areas,” said Martin Nisenholtz, senior vice president, Digital Operations, The New York Times Company. “This is a structure that provides an excellent complement to our current Web sites. We are looking forward to sharing our online publishing expertise with About and expect to see growth from enhancing the content offering, expanding its coverage and developing its sales and marketing resources.”
Murdok | Breaking eBusiness News
Your source for investigative ebusiness reporting and breaking news.
