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Future buys Dennis for £300m

Future Plc, the £4bn UK’s largest magazine group (and probably the fastest growing in the UK and US), has agreed to buy Dennis Publishing whose print and digital brands include The Week, Money Week, The Week Junior, Kiplinger Personal Finance, Science & Nature, IT Pro, Computer Active, PC Pro, Minecraft World, and Coach for “approximately £300m” in cash. Completion is expected on 1 October.

The four Dennis titles not being acquired by Future – Viz, Fortean Times, Cyclist and Expert Reviews – will be retained by Exponent private equity which had acquired the whole of Dennis Publishing (including Autovia, see below) for £167m in February 2019. It is assumed that this rump of the company will now be re-sold, probably to several separate buyers.

The acquisition of Dennis – whose revenue is 56% in the US and a total of 76% from its 700k subscriptions – creates the opportunity for Future to grow further and faster in the US, and in financial media. It is also expected to apply its successful e-commerce affiliate marketing skills to the new portfolio whose primary focus has (successfully) been subscriptions marketing.

The Kiplinger and Money Week parts of the deal are expected to be used to turbocharge its growth in wealth management, an area targeted by the Future management team in the US and UK. It may also have plans to knit these financial media closely together with its GoCompare price comparison/ cost saving web site.

The price is 15 x EBITDA in 2020 (£20m) and almost 3 x revenue (£104.8m). Revenue and EBITDA had increased by 12% and 14% respectively. It is believed the double-digit Dennis growth has continued in the first-half of 2021. Future is expecting to achieve cost savings of at least £8m per year, mostly through overheads.

The profit improvers are a rich reward for Future’s skillful acquisition of what has itself been a highly successful magazine-media company. It may mean that the seemingly heady 15 x EBITDA price tag for Dennis will be more like 10 x before the end of 2022 – a relatively low price for a predominantly subscriptions business. And that’s before factoring in the undoubted benefits for Future’s existing portfolio of acquiring what may be the UK’s most successful magazine subscriptions team.

The deal follows the earlier de-merger of the Dennis motoring interests (e-commerce and media) to create Autovia which is expected either to IPO or be sold to one of the larger players in the hot market for online car retailing. An expected valuation of at least £300m for Autovia could give Exponent a 3x payback on its investment in Dennis in little more than two years. Dennis is the latest of Exponent’s successful magazine-centric dealings in the UK after the former Times Education Supplement, and BBC Magazines/ Immediate Media.

For the fast-growing Future, the acquisition of the Dennis portfolio from Exponent private equity is the third large deal in just 18 months following £140m TI Media (the former Time Inc UK) in April 2020 and GoCompare for £594m earlier this year.

Future CEO Zillah Byng-Thorne said: the “high-quality portfolio of Dennis’ trusted brands… will accelerate our strategy, enhance our content capabilities and bring additional geographical and vertical revenue diversification, whilst materially increasing the proportion of recurring revenues across the Group. The materially earnings enhancing acquisition is highly complementary to our longstanding ‘US first’ mindset and provides an attractive opportunity to scale our recently created ‘Wealth’ vertical, whilst diversifying our presence in our ‘Knowledge’ and ‘B2B Pro Technology’ verticals.”

Future said the deal is being funded via its debt facility, which was increased to £600m last month. Before today, the company’s share price had increased by 64% in the past 12 months and 19% in the last month. It increased a further 5% today (Monday 16 August). Future’s market cap is edging ever closer to the £5bn which will make it a contender for the FTSE index of the UK’s 100 largest listed companies. Yes.

For all the troubled history of the company founded in 1985 by the TED Talks creator Chris Anderson, once wary investors in Future now recognise that really only the name is the same as that of the under-capitalised and sparky tech magazine company which all but went bust a year after its IPO in 1999.

Future is now a strong global media platform, reaching 1 in 3 adults both in the UK and US with diversified revenue streams across e-commerce, subscriptions, advertising, and events. Its key sectors include technology, games & entertainment, music, home & gardens, sports, TV & film, real life, women’s lifestyle and B2B.

Ironically, in 2010 – a whole decade after its millennial collapse – Future had offered to acquire Dennis Publishing for £400m, only to be turned down by owner Felix Dennis who wanted £500m. The former Australian Consolidated Press also failed to get him to budge on price when it came calling.

Now, eleven years later, the hugely more successful and strategically stronger Future has bought the grown-up digital savvy Dennis – for much less.

Dennis Publishing was built from the 1970s by the larger-than-life Dennis who died in in 2014 after a lifetime of winning against the odds as an entrepreneur, poet, publishing visionary – and creator of the amazing 30,000-acre Heart of England Forest which will now be the most prominent remaining part of his legacy. Times to remember.

Future Plc