DES MOINES, Iowa, Nov. 26, 2017 /PRNewswire/ -- Meredith
Corporation (NYSE: MDP; www.meredith.com) announced today
that it has entered into a binding agreement to acquire all
outstanding shares of Time Inc. (NYSE: TIME;
www.timeinc.com) for $18.50
per share in an all-cash transaction valued at $2.8 billion. The transaction has been
unanimously approved by the Boards of Directors of Meredith and
Time Inc., and is expected to close during the first quarter of
calendar 2018.
"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 Corporation Chairman and CEO
Stephen M. 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. We are also
creating a powerful digital media business with 170 million monthly
unique visitors in the U.S. and over 10 billion annual video views,
enhancing Meredith's leadership position in reaching
Millennials."
The transaction will create a diversified media and marketing
company with calendar 2016 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. Additionally, Meredith anticipates
generating cost synergies of $400 million to
$500 million in the first full two years of operation.
"This is a transformative transaction for Meredith Corporation,
and follows a fiscal 2017 in which we posted the highest revenues,
profit and earnings per share in our 115-year history," said
Meredith President and Chief
Operating Officer Tom Harty.
"When you combine our strong local television business – which has
grown operating profit 15 percent annually over the last five years
– with the trusted, premium multiplatform content creation of
Meredith and Time Inc., it creates a powerful media company serving
consumers and advertisers alike. We look forward to completing the
transaction; welcoming the Time Inc. employees to Meredith;
delivering on our pledge to achieve identified synergies; and
growing shareholder value."
Key Strategic and Financial Benefits of the
Transaction:
- Creates unparalleled portfolio of national media brands with
greater scale and efficiency – Combined, Meredith's brands 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.
- Continues the strong and growing contribution from local
media – Meredith's portfolio of 17 high-performing television
stations in 12 markets is a consistent generator of strong cash
flow. Meredith's stations – which reach more than 11 percent of
U.S. television households – are primarily Big 4 network affiliates
located in fast-growing markets. In fiscal 2017, Meredith's
broadcasting business delivered the best year in its 60-year
history, generating record revenues and profit – including more
than $60 million of political ad
revenues – and an EBITDA margin of 40 percent. Looking ahead,
Meredith anticipates another strong political advertising year in
fiscal 2019.
- Accelerates Meredith's digital position by adding
significant scale – Meredith will be transformed into a Top 10
digital media company with 170 million unique monthly visitors in
the U.S., over 10 billion annual video views, and nearly
$700 million in digital advertising
revenues. It will operate the No. 1 premium digital network for
American consumers with unmatched reach to Millennials.
Additionally, Meredith will be a top-tier data player with a
database of more than 250 million email addresses/device IDs,
paired with leading advertising technology platforms and shopper
marketing capabilities.
- Provides advertising and consumer revenue diversification
and growth – Meredith will be well-positioned to benefit from
fast-growing digital advertising platforms, including native,
video, shopper marketing, programmatic and social. Also, Meredith
expects to increase consumer revenue from diversified streams,
including bundled circulation activities, brand licensing,
ecommerce, events, video creation, content management, and
marketing services.
- Enhances financial strength and flexibility – Meredith
expects the transaction will be accretive to free cash flow in the
first full year of operations. Meredith has demonstrated a strong
track record of achieving cost synergies with prior acquisitions,
and is confident in its ability to optimize the cost structure of
the combined business. The increased scale and free cash flow –
coupled with cost synergy achievement – positions Meredith to
aggressively pay down debt and achieve a leverage ratio of
approximately 2x by 2020, and take advantage of future acquisition
opportunities in the media space.
- Increases Total Shareholder Return – Meredith remains
committed to delivering top-third Total Shareholder Return.
Meredith will continue to pay its current annual dividend of
$2.08 per share, and expects ongoing
annual dividend increases. Meredith has paid a dividend for 70
consecutive years and has increased it for 24 straight years.
"To summarize, we believe this acquisition represents a
transformative and financially compelling growth opportunity for
Meredith Corporation and will increase shareholder value over
time," Lacy said. "We are acquiring an impressive portfolio of
leading brands and a digital business of scale with tremendous
growth potential, complemented by our growing television
broadcasting business that produces strong cash flow, fueled by
growing political advertising and retransmission revenues. And the
company will be led by Meredith's executive management team with
expertise in integrating acquisitions and operating multiplatform
media businesses."
Financing
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 Koch Equity Development (KED). Funds will be
used to finance the transaction and refinance existing debt.
KED has deployed in excess of $8
billion of industry agnostic principal investments over the
last five years. Its $650 million
investment in Meredith follows more than $2
billion of passive, preferred equity investments supporting
four similar strategic transactions involving publicly traded
entities.
KED will not have a seat on the Meredith Board and will have no
influence on Meredith's editorial or managerial operations. KED's
non-controlling, preferred equity investment underscores a strong
belief in Meredith's strength as a business operator, its
strategies, and its ability to unlock significant value from the
Time Inc. acquisition. Rothschild, Inc. and Credit Suisse are
serving as financial advisors to KED and Jones Day is serving as
legal counsel.
Timing and Approvals
Under the terms of the agreement, Meredith will commence a
tender offer to acquire all the issued and outstanding shares of
Time Inc. common stock for $18.50 per
share in cash.
The transaction is subject to customary closing conditions and
regulatory approvals, including the tender of a majority of the
outstanding shares of Time Inc. common stock and clearance under
the Hart-Scott-Rodino Antitrust Improvements Act. The
transaction is expected to close during the first quarter of
calendar 2018.
Meredith Advisors
BDT & Company and Moelis & Company are serving as
financial advisors to Meredith, and Cooley LLP is serving as legal
counsel.
Investor Conference Call
Meredith will hold a conference call with investors to discuss
this announcement on November 27 at
8 a.m. EST. A live webcast will
be accessible through www.meredith.com. Allow at least 10 minutes
to access Meredith's investor relations website before the webcast
begins. Meredith will post an investor presentation to
accompany today's call on its investor relations website at
7:00 a.m. EST. A telephone
replay of the call will be available until December 11, 2017, by dialing domestic toll-free
(855) 859-2056, or internationally (404) 537-3406. The access code
is 2873218.
Additional Information
The offer has not yet commenced, and this communication is
neither an offer to purchase nor a solicitation of an offer to sell
any shares of the common stock of Time Inc. or any other
securities. On the commencement date of the offer, a tender offer
statement on Schedule TO, including an offer to purchase, a letter
of transmittal and related documents, will be filed with the SEC by
purchaser and a Solicitation/Recommendation Statement on Schedule
14D-9 will be filed with the SEC by Time Inc. The offer to purchase
shares of Time Inc.'s common stock will only be made pursuant to
the offer to purchase, the letter of transmittal and related
documents filed as a part of the Schedule TO. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ BOTH THE TENDER OFFER STATEMENT
AND THE SOLICITATION/RECOMMENDATION STATEMENT REGARDING THE OFFER,
AS THEY MAY BE AMENDED FROM TIME TO TIME, WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The
tender offer statement will be filed with the SEC by purchaser, and
the solicitation/recommendation statement will be filed with the
SEC by Time Inc. Investors and security holders may obtain a free
copy of these statements (when available) and other documents filed
with the SEC at the website maintained by the SEC at www.sec.gov or
by directing such requests to the Information Agent for the offer,
which will be named in the tender offer statement.
Forward-Looking Statements
This press release contains forward-looking statements. You can
generally identify forward-looking statements by the use of
forward-looking terminology such as "anticipate," "believe,"
"continue," "could," "estimate," "expect," "explore," "evaluate,"
"intend," "may," "might," "plan," "potential," "predict,"
"project," "seek," "should," or "will," or the negative thereof or
other variations thereon or comparable terminology. These
forward-looking statements are only predictions and involve known
and unknown risks and uncertainties, many of which are beyond
Meredith's, purchaser's and Time Inc.'s control.
Statements in this document regarding Meredith, purchaser, and
Time Inc. that are forward-looking, including, without limitation,
projections as to the anticipated benefits of the proposed
transaction, the methods that will be used to finance the
transaction, the impact of the transaction on anticipated financial
results, the synergies from the proposed transaction, and the
closing date for the proposed transaction, are based on
management's estimates, assumptions and projections, and are
subject to significant uncertainties and other factors, many of
which are beyond the control of Meredith, purchaser and Time Inc.
Important risk factors could cause actual future results and other
future events to differ materially from those currently estimated
by management, including, but not limited to: the timing to
consummate the proposed transaction; the risk that a condition to
closing of the proposed transaction may not be satisfied and the
transaction may not close; any failure to obtain equity or debt
financing; the risk that a regulatory approval that may be required
for the proposed transaction is delayed, is not obtained or is
obtained subject to conditions that are not anticipated; the
ability to achieve the synergies and value creation contemplated by
the proposed transaction; management's ability to promptly and
effectively integrate the businesses of the two companies; and the
diversion of management time on transaction-related issues.
For more discussion of important risk factors that may
materially affect Meredith, purchaser and Time Inc., please see the
risk factors contained Meredith's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2017,
and Time Inc.'s Quarterly Report on Form 10-Q for the quarter ended
September 30, 2017, both of which are
on file with the SEC. Except as specifically noted, information on,
or accessible from, any website to which this website contains a
hyperlink is not incorporated by reference into this website and
does not constitute a part of this website.
No assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur, or if any
of them do occur, what impact they will have on the results of
operations, financial condition or cash flows of Meredith,
purchaser or Time Inc. None of Meredith, purchaser or Time Inc.
assumes any duty to update or revise forward-looking statements,
whether as a result of new information, future events or otherwise,
as of any future date.
About Meredith Corporation
Meredith Corporation (NYSE: MDP; www.meredith.com)
has been committed to service journalism for 115 years. Today,
Meredith uses multiple distribution platforms – including broadcast
television, print, digital, mobile and video – to provide consumers
with content they desire and to deliver the messages of its
advertising and marketing partners.
Meredith's Local Media Group includes 17 television stations
reaching more than 11 percent of U.S. households. Meredith's
portfolio is concentrated in large, fast-growing markets, with
seven stations in the nation's Top 25 – including Atlanta, Phoenix, St.
Louis and Portland – and 13
in Top 50 markets. Meredith's stations produce 700 hours of local
news and entertainment content each week, and operate leading local
digital destinations.
Meredith's National Media Group reaches 110 million unduplicated
women every month, including more than 70 percent of U.S.
Millennial women. Meredith is the leader in creating and
distributing content across platforms in key consumer interest
areas such as food, home, parenting and lifestyle through
well-known brands such as Better Homes & Gardens, Allrecipes,
Parents and Shape. Meredith also features robust brand licensing
activities, including more than 3,000 SKUs of branded products at
5,000 Walmart stores across the U.S. and at walmart.com. Meredith
Xcelerated Marketing is an award-winning, strategic and creative
agency that provides fully integrated marketing solutions for many
of the world's top brands.
Meredith's balanced portfolio consistently generates substantial
free cash flow, and the Company is committed to growing Total
Shareholder Return through dividend payments, share repurchases and
strategic business investments. Meredith's current annualized
dividend of $2.08 per share yields
3.4 percent. Meredith has paid a dividend for 70 straight
years and increased it for 24 consecutive years.
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SOURCE Meredith Corporation