Newsletter acquisition pace holding steady, but dollar value up, according to two M & A firms.

The pace of newsletter and specilized-information acquisitions in the second quarter of 2004 was about the same as the same period last year--six deals this year compared with four last year--according to the merger and acquisitions firm Whitestone Communications, which tracks M & As for its annual reference book, Who's Buying Whom.

The investment banking firm Jordan, Edmiston Group Inc. reported similar figures. Its report, which covers the first two quarters of 2004, found that newsletter M & As increased 149 percent in dollar value over the same period last year.

Whitestone Communications associate Jenifer Lindenman noted, "We believe that the acquisition pace is being held back due to a lack of sellers. We have spoken with a number of publishers who might normally be considering a sale but their results have not recovered sufficiently from the recent recession to allow them to get a price for their businesses that they believe they deserve. Meanwhile, we have a lot of buyers eager to buy good subscription-based properties."

The persistent James Finkelstein

The dollar value of deals got a boost from one transaction, the acquisition of Thompson Publishing by James Finkelstein (NL/NL 5/16/04). Whitestone estimates the quarter's total value was $60 million versus last year's second quarter estimate of $11 million.

"Finkelstein deserves an award for persistence," Lindenman said. "Thompson had been put up for sale about a year ago but then taken off the market when the owner, Richard Thompson, did not get his price. Clearly, Finkelstein did not take 'no' for an answer and kept after Richard to get the deal done while other bidders had left the scene."

In other sizable deals of the second quarter, Commonwealth Business Media, owner of a number of transportation directories as well as the Journal of Commerce, acquired a large group of directories from Compass North America, including Seaports of the Americas AAPA, Seaports Magazine, Georgia Ports Authority Guide & Directory, and The Port Everglades Guide & Directory.

Jordan, Edmiston sees many favorable trends

Wilma H. Jordan, CEO of Jordan, Edmiston, reported a number of favorable economic trends that bode well for newsletter and specialized information publishers:

* "Lending multiples are strong, as banks are focused on new lending opportunities and interest rates remain historically low.

* "The U.S. economy continues to grow, as real GDP increased at a 5.5 percent annual rate over the past three quarters.

* "Chief executives' confidence in the U.S. economy, as reported by The Conference Board, surged to 73 in Q1 2004, the highest level in the past 20 years.

* "Small-to-mid-size B2B media companies are acquiring subscription-based businesses in order to diversify their revenue streams, add new content delivery channels and ensure they are providing real-time, 'must have' content to their readers.

* "Large B2B media companies are shedding non-core assets and continuing to add subscription-based businesses, particularly databases.

* "Buyers and sellers are reentering the M & A market, due to a combination of higher valuations for sellers and numerous buyers intent on growing through acquisitions."

Whitestone, 1350 Avenue of the Americas, #1200, New York, NY 10019, 212-957-7100, fax [phone], www.whitestonecommunications.com

Jordan, Edmiston, 150 East 52nd St., 18th Fl., New York, NY 10022, 212-754-0710, fax [phone], www.jegi.com