ZDPub+MI+Edu+TV=$780 M+106+172+204.8=$1.2628 B. Left are SmartPlanet, Computer Shopper, Red Herrring, ZDZ
ZD to Sell Publishing Unit for $780 Million (Update2)
(Adds information on Willis Stein in 17th paragraph. Updates
shares.)
New York, Dec. 6 (Bloomberg) -- Ziff-Davis Inc. agreed to
sell its publishing division, whose magazines include PC Week and
PC Magazine, to closely held investment firm Willis Stein &
Partners LP for $780 million as it sheds assets to cut its debt.
The unit is the largest U.S. publisher of computer
magazines, printing more than 80. Once the sale closes, New York-
based Ziff-Davis, majority owned by Japan's Softbank Corp., will
be left with its trade show division, the producer of Comdex
technology shows. It also owns ZDNet, a publicly traded online
unit and the Internet-based learning service SmartPlanet.com.
Ziff-Davis shares fell 1 5/16 to 16 15/16 in late trading of
663,600, almost three times the three-month daily average. The
publishing division was expected to fetch a price closer to $1
billion, disappointing some investors.
``I'm satisfied but more would've been better,' said Peter
Higgins, lead portfolio manager at Dreyfus Midcap Value Fund,
which owns Ziff-Davis shares. ``But they got more than people
expected when they sold the other assets so it's basically a
wash.'
Ziff-Davis, which hasn't made a profit since its initial
share sale in April 1998, hired Morgan Stanley Dean Witter & Co.
in July to help it explore alternatives. Since then, it sold its
market-intelligence business for $106 million. It also agreed to
sell its ZD Education unit for $172 million and its interest in
cable-television channel ZDTV for $204.8 million.
Debt Free
The company will be debt-free if all the asset sales close
as planned, spokesman Robert Borchert said. It currently has
about $1.2 billion in debt.
Higgins said he's was pleased overall by the asset sales.
Dreyfus held 144,400 Ziff-Davis shares as of September.
``We think the value of the pieces of the company are worth
more than the whole,' he said. ``They promised to boost
shareholder value and they're doing it.'
Willis Stein, based in Chicago, appointed James Dunning to
be chairman of Ziff-Davis Publishing and chairman and chief
executive of a new holding company, Ziff-Davis Holdings LLC.
Dunning had been chairman and chief executive of consumer
magazine publisher Emap Plc's Emap Petersen unit. In October,
Willis Stein and Dunning agreed to work together on investments
in media companies.
Mike Perlis will continue as president and chief executive
of Ziff-Davis Publishing when the sale closes, expected in the
first quarter.
Ziff-Davis Publishing has annual revenue of about $500
million and is profitable, its executives said. Annual earnings
before interest, taxes, depreciation and amortization are about
$100 million a year, they said.
The unit has about 1,200 employees and will continue to be
based in New York. No layoffs are planned, Willis Stein spokesman
Daniel Courtney said. Ziff-Davis Inc. has about 2,900 workers,
Borchert said.
ZDNet will be able to use stories produced at Ziff-Davis
Publishing for five years in exchange for royalties.
``We will continue to develop our Internet presence by
working with ZDNet,' said Avy Stein, managing partner of Willis
Stein.
Largest Acquisition
Willis Stein also plans to grow the business by launching
new magazines and making acquisitions, Stein said. The
acquisition of Ziff-Davis Publishing would be Willis Stein's
largest ever, Courtney said.
Founded in 1995 by John Willis and Avy Stein, Willis Stein
manages about $1.2 billion of equity capital has invested in
companies including CTN Media Group Inc., Petersen Cos. and Troll
Communications LLC.
Willis Stein has a recent and successful history of buying,
improving and then selling publishing properties. It bought
Petersen, a Los Angeles-based publisher of magazines including
Motor Trend, Teen and Hot Rod, for $465 million in a 1996
leveraged buyout. It cut costs, lowered debt, closed down some
titles, and improved financial performance then sold the company
to Emap in January for $1.5 billion in cash and assumed debt.
NEW YORK, Dec 6 (Reuters) - Trade magazine publisher Ziff-Davis
Inc., seeking to boost its sagging share price, said on Monday it agreed to
sell PC Magazine, PC Computing and most of its other publications for
$780 million in cash to private investment firm Willis Stein & Partners.
Ziff-Davis said it would retain the publications Computer Shopper and its
ownership interest in Red Herring, a Silicon Valley based-venture capital
magazine. It will also keep its Internet properties, traded under the
separate tracking stock of ZDNet. The deal includes a five-year deal under which ZDNet will pay royalties
to use Ziff-Davis Publishing content online for five years.
Ziff-Davis Publishing is the latest in a stream of businesses to be sold by Ziff-Davis, including education,
market research and television units. The moves are part of the company's bid to boost the value of its
flagging share price.
Shares of Ziff-Davis, (NYSE:ZD - news) which includes print publishing, trade shows and conference
businesses, fell 1-7/16 to 16-13/16 in early afternoon trade on the New York Stock Exchange. ZDNet
(NYSE:ZDZ - news) shares fell 1-1/2 to 21-3/8, also on the NYSE.
``This is a major step toward our goal of unlocking value for our shareholders,' Eric Hippeau, Ziff-Davis
chairman and chief executive, said in a statement. He said he believed Willis Stein had the resources and
commitment ``to leverage Ziff-Davis Publishing's global brands and marketing platforms' and to ``build and
expand upon their leadership position.'
The publishing unit transaction is expected to close in the first quarter of 2000 and is subject to financing and
other customary conditions, the company said.
The unit publishes PC Magazine, the world's No. 1 ranked computer trade magazine, PC Week, a computer
industry weekly and PC Computing, the No. 2-ranked U.S. computer consumer monthly. It also includes
Interactive Week, an Internet weekly magazine, and Yahoo! Internet Life, a popular Internet consumer
magazine title.
Avy Stein, managing partner of Willis Stein & Partners, said his company planned to work with the
Ziff-Davis management team as well as ``partnering with ZdNet and Ziff-Davis's other business ventures.' |
