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Evercore Capital Partners and David Pecker Announce Agreement to Acquire American Media Inc.

NEW YORK--(BUSINESS WIRE)--Feb. 16, 1999--Evercore Capital Partners LLC ("Evercore") and American Media Inc. ("American Media") (NYSE:ENQ) Tuesday announced that they have entered into a definitive merger agreement providing for the acquisition by an affiliate of Evercore of all of the outstanding shares of American Media.

American Media publishes National Enquirer, Star, Weekly World News and Country Weekly. Distribution Services Inc., a wholly owned subsidiary, provides marketing, merchandising and information gathering services to publishing and consumer products companies and retailers. The $767 million transaction marks Evercore's second purchase as a private equity investor.

American Media shareholders will receive $7 in cash for every Class A and Class C share they own. This represents a 26.1% premium to the average closing price over the last 15 trading days. The merger, which is subject to financing, shareholder approval, and other customary conditions, is expected to close in the next two to three months. In connection with the financing for the merger, American Media Operations Inc. will offer to purchase all of its existing 11 5/8% Senior Subordinated Notes due 2004. Affiliates of Boston Ventures Limited Partners and executives of the company together own 51.1% of the total shares outstanding and control 75.5% of the combined voting rights of American Media shares. Both have agreed to vote their shares in favor of the transaction and have given Evercore an option to purchase their shares.

David J. Pecker, chief executive officer of Hachette Filipacchi Magazines, is resigning to become chairman and CEO at American Media and will receive an equity stake in the acquired company. Pecker is well-known in the media world, having doubled Hachette's sales during his seven years as CEO while building the company into the third largest consumer magazine publisher in America. With American Media, he plans to leverage the company's strong national brands with aggressive ad sales and extended product lines, as well as expanding the readership via national advertising and brand building programs.

Commenting on the transaction, Austin Beutner, Evercore principal and founder, stated, "The American Media investment is consistent with our strategy to invest in quality companies in partnerships with talented managers (like David Pecker and the team at American Media) where we can create significant value." Added Beutner, "David is an executive focused on the bottom line with a great track record of building and acquiring brands. With his leadership, we plan to capitalize on the potential of the National Enquirer and Star brands as well as other opportunities at the Company." Continued Beutner, "The Company generates a great deal of free cash flow which we expect to invest in extending the existing brands and acquiring new ones. This acquisition provides a platform for building a major company in this sector."

Pecker added, "There are very few brands that combine the high profile and high circulation levels of the Enquirer and Star. As a direct result of certain attitudinal shifts in the marketplace which are already occurring, we feel these publications can be positioned for future growth on both the advertising and circulation fronts. There is also an enormous opportunity to expand the company's revenues through the targeted use of DSI, American Media's proprietary distribution subsidiary. All of this gives us one of the strongest platforms in publishing to build on."

On his decision to leave Hachette, Pecker said "I am very grateful to Jean Luc Lagardere, Daniel Filipacchi, Arnaud Lagardere and Gerald de Roquemaurel for giving me the opportunity to serve as CEO of Hachette. It was not easy for me to leave, but they knew my ambition was to eventually have an equity position in my own company. This shared venture with Evercore has given me that chance. Austin and his team are great people and I feel fortunate to be able to partner with them in this effort."

Both Beutner and Pecker said they planned no changes in the existing operating structure of American Media at this time, voicing support for the staffs at all the AMI publications.

Evercore Partners provides financial and strategic advisory services to major corporations and makes private equity investments through its Evercore Capital Partners affiliate which has committed funds of $510 million.

Recent transactions Evercore has advised on include Dow Jones on its overall strategy and specifically the formation of a joint venture between The Wall Street Journal and CNBC and the divestiture of its Dow Jones Markets (formerly Telerate) business; Pennzoil on its successful defense against Union Pacific Resources hostile offer and subsequent merger of Pennzoil's downstream operations with Quaker State; CBS/Westinghouse's sale of its Thermo King business to Ingersoll Rand and its power generation business to Siemens; The Williams Companies on its investment in a refinery privatization in Lithuania; and Tenneco on its announced review of strategic alternatives.

Evercore Capital Partners has previously committed to invest up to approximately $40 million in Specialty Products and Insulation, a leading distributor of acoustical ceiling tiles and commercial insulation products.

Lazard Freres & Co. LLC represented American Media in this transaction. Chase Securities Inc. represented Evercore Partners, and Chase Manhattan Corp. has provided financing commitments for the transaction.
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Publication:Business Wire
Geographic Code:1USA
Date:Feb 16, 1999
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