Meredith Corp to buy Time Inc in $2.8-bn deal

US media company Meredith Corp yesterday struck a deal to buy Time Inc, the owner and publisher of over 100 magazine brands including its flagship Time magazine, for $2.8 billion including debt.

The deal has been backed by an infusion of $650 million from billionaire brothers Charles and David Koch through their private equity firm, Koch Equity Development (KED).

Under the terms of the deal approved by the board of both companies, Meredith will pay $18.50 per share, valuing the deal at $2.8 billion.

The transaction expected to close during the first quarter of 2018.

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 KED, which will be used to finance the acquisition and refinance existing debt.

Meredith said that KED will not have a seat on the Meredith Board and will have no influence on the company's editorial or managerial operations.

Founded in 1922 by Henry Luce and Briton Hadden, New York City-based Time Inc owns and publishes over 100 magazine brands, that include, apart from Time magazine, Sports Illustrated, Travel + Leisure, Food & Wine, Fortune, People, InStyle, Life, Golf Magazine, Southern Living, Essence, Real Simple, and Entertainment Weekly.

It also owns the UK magazine house Time Inc, UK, whose major titles include What's on TV, NME, Country Life, Wallpaper and InStyle.

Time Inc. also operates over 60 websites and digital-only titles including MyRecipes, TheSnug, HelloGiggles and MIMI.

Like many other publishers, Time Inc. has been hit by a decline in print ad sales since advertisers spend more on other media and readers increasingly move online, but its digital advertising has seen a robust rise with 170 million monthly unique visitors in the US and more than 10 billion annual video views.

The merged company will have a readership of 135 million and paid circulation of nearly 60 million, with leading positions in celebrity, food, lifestyle, news and sports, parenting, and home content creation, as well as enhanced positions in the beauty, fashion and luxury advertising categories.

The transaction will have combined revenues of $4.8 billion – including $2.7 billion of total advertising revenues with nearly $700 million of digital advertising revenues – and adjusted EBITDA of $800 million.

Meredith anticipates generating cost synergies of $400 million to $500 million in the first full two years of operation.

"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 chairman and CEO Stephen 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," he added.