NEW YORK — Time Inc. (NYSE: TIME) — publisher of Time, People, Fortune and Sports Illustrated magazines — has agreed to be acquired by Meredith Corporation (NYSE: MDP) for under $3 billion.
Based in Des Moines, IA, Meredith publishes magazines including Better Homes and Gardens, Family Circle, Martha Stewart Living and Parents.
Under the terms of the agreement, Meredith will make an $18.50 per share cash offer to acquire all outstanding Time Inc. shares for a total value of $2.8 billion, including the assumption of debt and net of cash acquired. The transaction has been unanimously approved by the Boards of Directors of Meredith and Time Inc., and is expected to close during the first quarter of 2018. The $18.50 per share price represents a 46% premium over the closing price on November 15, 2017, the day prior to media reports about the transaction, and a 66% premium over the 10-day volume weighted average trading price ending on that day.
Time Inc. shares closed at $16.90 per share on Friday.
Meredith has secured a total of $3.55 billion – which includes a $350 million undrawn revolving credit facility – in fully committed debt financing from RBC Capital Markets, Credit Suisse, Barclays and Citigroup Global Markets Inc. Meredith has also secured $650 million in preferred equity commitment from Koch Equity Development (KED), the investment arm of Koch Industries. Funds will be used to finance the transaction and refinance existing debt.
“We are creating a premier media company serving nearly 200 million American consumers across industry-leading digital, television, print, video, mobile, and social platforms positioned for growth,” said Meredith Corporation Chairman and CEO Stephen M. Lacy. “We are adding the rich content-creation capabilities of some of the media industry’s strongest national brands to a powerful local television business that is generating record earnings, offering advertisers and marketers unparalleled reach to American adults. We are also creating a powerful digital media business with 170 million monthly unique visitors in the U.S. and over 10 billion annual video views, enhancing Meredith’s leadership position in reaching Millennials.”
The Meredith-Time Inc. deal forms a new media company with 2016 combined revenues of $4.8 billion – including $2.7 billion of total advertising revenues with nearly $700 million in digital advertising revenues. Meredith anticipates cost savings — most likely from layoffs — of $400 million to $500 million in the first full two years of operation.
“This is a transformative transaction for Meredith Corporation, and follows a fiscal 2017 in which we posted the highest revenues, profit and earnings per share in our 115-year history,” said Meredith President and Chief Operating Officer Tom Harty. “When you combine our strong local television business – which has grown operating profit 15 percent annually over the last five years – with the trusted, premium multiplatform content creation of Meredith and Time Inc., it creates a powerful media company serving consumers and advertisers alike. We look forward to completing the transaction; welcoming the Time Inc. employees to Meredith; delivering on our pledge to achieve identified synergies; and growing shareholder value.”
John Fahey, Chairman of the Board, said, “Time Inc.’s Board of Directors has unanimously determined that this all-cash transaction, and the immediate, certain value it provides, is in the best interests of the Company and its shareholders. On behalf of the entire Board, I thank Rich Battista for his strong and exemplary leadership. We also thank the management team and all Time Inc. employees, who together have made significant progress transforming one of the world’s most iconic and historically significant publishing companies into a leading multiplatform media enterprise.”
Rich Battista, President and CEO of Time Inc., stated, “I am proud of our accomplishments and thank the talented teams across the Company for their extraordinary work, relentless commitment, and passion. Together, we moved quickly and successfully to launch, grow, and advance our multi-platform offerings during unprecedented times in the media sector. Time Inc. now engages over 230 million consumers across digital and print every month through a portfolio of premium, iconic brands that are well positioned to continue to be powerful voices in media for many years to come.”
The transaction is subject to customary closing conditions and regulatory approvals, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act.
Rich Battista will work closely with the Meredith management team to ensure a smooth transition through the closing date. Upon the closing, it is expected that Battista will leave the Company.
Morgan Stanley & Co. LLC and BofA Merrill Lynch served as financial advisors to Time Inc. and Debevoise & Plimpton LLP served as legal advisor.