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M&A activity increases during first six months of 2005.

There were 266 deals valued at nearly $27 billion across 11 media and information industry categories in the first half of 2005, according to figures supplied by The Jordan Edmiston Group, Inc. (JEGI; New York). The number of deals this year represents a 15% increase over the 231 deals reported in the first six months of 2004 while the value of the deals increased 181% from the $9.5 billion reported in the period last year.

Eight of the 11 categories showed an increase in both number of deals and the value of those deals. Of the three categories showing a decline, the Consumer Books category went from seven deals valued at $45 million to five deals valued at $35 million while the number of deals in the Newsletter Publishing category fell from 16 to 12 and their value declined 84%, going from $161 million in 2004 to $26 million this year. The number and value of deals in the Database Information Services category fell from 31 deals valued at $2.2 billion last year to 18 deals valued at $271 million in 2005.

The ten largest deals of the first half of 2005 included T&F Informa's purchase of IIR Holdings for $1.4 billion at number six, United Business Media's sale of NOP World for $704 million to GfK AG as the seventh largest deal and JP Morgan Partners purchase of Hanley Wood from Veronis Suhler Stevenson for $650 million as the eighth largest deal. In terms of deal value, the largest category percentage gainers were: Consumer Magazines (+1379%); Directory and Reference Publishing (+2315%); Educational and Professional Publishing (+194%); Exhibitions and Conferences (+257%); Marketing and Interactive Services (+150%); newspaper publishing (+247%) and Online Media (+181%). There were 26 deals valued at $11.7 billion in 2005 in the BtoB Magazine category compared to 18 deals valued at $1.08 billion for the first six months of 2004.

JEGI said the increase in deals was "driven by strong advertising and information markets, a renewed commitment to corporate growth and low interest rates." The company said the current M&A market is "very competitive, as companies seek strategic and add-on growth and private equity firms actively pursue new investments. Additionally, lenders are willing to provide leverage for media and information M&A deals at historically high levels."

Joseph Mansueto, chairman and chief executive of investment firm Morningstar, Inc., (Chicago, IL) has formed a new company and has agreed to acquire the assets and liabilities of "Inc." and "Fast Company" magazines from G+J Publishing Co. (New York), a unit of Bertelsmann AG, for about $40 million. Pending Justice Department approval, the deal is expected to close by the end of July. G+J purchased the two magazines in separate deals in 2000, paying $200 million for "Inc." and $365 million for "Fast Company."

Mansueto reportedly outbid The Economist Group for the two magazines with his willingness to continue publishing "Fast Company" the determining factor. Launched in October 1993, "Fast Company" advertising pages have fallen 15.4% through the first five months of 2005. The magazine reportedly lost as much as $8 million last year. Although reliable revenue figures for "Inc." were not available, the magazine had a reported contribution of $4 million in 2004 with ad pages declining 7.2% through the end of May in 2005. Ad pages for this month compared to June 2004 increased 6% for "Inc." and 6.3% for "Fast Company." Since almost all of the bidders, save Mansueto, were planning on closing "Fast Company," the $40 would have represented a multiple of 10 times EBITDA of "Inc." magazine's $4 million contribution.

"Fast Company" is published monthly with a rate base of 750,000. "Inc." is published 13 times a year with a rate base of 665,000. Mansueto said he was "delighted to acquire two of the nation's leading business magazines. I have long admired both publications. They have everything I look for in a media company: world-class brands, exceptional management, high quality content and loyal readers and advertisers." Nearly all of the major general business magazines, including "Forbes," "BusinessWeek," "The Economist" and "Fortune", have experienced a decline in year-to-date advertising pages. Only "Business 2.0" has shown an increase ad pages for the first five months of 2005.

The deal closely follows G+J's sale of four consumer magazine titles, including "Parents," "Child," "Fitness" and "Family Circle" to Meredith Corp. (Des Moines, IA) on June 9.
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Title Annotation:Mergers and acquisitions
Comment:M&A activity increases during first six months of 2005.(Mergers and acquisitions )
Publication:Business Publisher
Geographic Code:1USA
Date:Jun 30, 2005
Previous Article:F+W Publications acquired by ABRY Partners.
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