Australia’s two largest printers, IVE Group and Ovato, have supported Seven West Media’s binding agreement to sell Pacific Magazines, the publisher of Marie Claire and Better Homes & Gardens, to Bauer Media for $40 million saying they have a strong relationship with each publishing company.
The sale of the suite of magazines is expected to be finalised by the end of the 2019 calendar year subject to Australian Competition and Consumer Association approval.
Bauer Media publishes titles including Woman’s Day and the Australian Women’s Weekly and recently signed a three-year print and distribution deal for all of its 34 titles with Ovato.
IVE Group currently prints Pacific Magazines titles and executive chairman Geoff Selig has told Sprinter that given the strong relationship IVE has long held with Bauer Media and Pacific Magazines, he expects that will continue with the combined organisation when the deal is completed.
“There’s been quite a lot of consolidation in the publishing sector over the last decade so the coming together of the two largest publishers is probably not unexpected given there’s been some talk about it in the market for some time,” Selig told Sprinter.
“From an IVE Group perspective, we have a good relationship with Pacific Magazines and Bauer Media and have done for some time and we would be hopeful of continuing to have a meaningful relationship with the combined organisation.
“Given we are the largest printer in the country and the diversity of our offer as well I would think we would continue to be a good fit for the combined business.”
Ovato chief executive officer Kevin Slaven said the move is positive as it demonstrates focused investment in print magazines which in turn benefits the printing industry.
“It’s a positive move and demonstrates Bauer’s future focused investment in print magazines in Australia, which in turn is good for the print industry. We have shown our commitment to both publishers over the years and ongoing will provide the specialist print and distribution services required to get their brands to market,” Slaven said in a statement to Sprinter.
Under the deal, Seven West Media will sell the magazines division to Bauer for $40m (pre-adjustments and leave provisions), with the figure representing a 4.9 times EV/EBITDA multiple based on the 2019 financial year, a statement from Seven West Media to the Australian Securities Exchange says.
The proceeds of the sale will be used to pay down debt, improve Seven West Media’s balance sheet flexibility and simplify the organisation to focus on its content led growth strategy.
Seven West Media and Bauer Media have also entered into commercial arrangements to mutually benefit both parties, including advertising spend commitments, the ongoing production of Better Homes and Gardens TV show and sharing lifestyle content under a long-term agreement, the statement to the Australian Securities Exchange said.
Seven West Media will receive $6.6m of advertising on Bauer Media assets over three years.
James Warburton, managing director and CEO of Seven West Media, said in a statement: “The sale of Pacific Magazines is another major initiative aligned with our strategy to improve balance sheet flexibility and simplify the operating model to enable greater focus on growth initiatives. The team at Pacific have been at the forefront of our groups transformation and have done a tremendous job at repositioning their business, but there can be no dout that there is a greater future within a larger scaled magazine group.”
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