The £160m-revenue UK-based Dennis Publishing, owner of The Week in the UK and US, a slew of motoring, computer and tech magazines, and Buy-a-Car e-commerce is set to be acquired by private equity firm Exponent for a price of £167.4m, 1 x revenue. Not really a low price but many observers reckon that The Week itself may be worth more than half of the sum being paid, and all kinds of non-media types may value Buy-a-Car at £75m+.
The attractions of Dennis at a time of magazine-market weakness include: its strong subscriptions revenue (by contrast with most newsstand-dependant UK mags),the fast-growing e-commerce, the US (and global) growth potential for The Week and current 10-15% profit margins. On the downside are a weakening print portfolio (4-5 magazines may soon be closed), decline in UK sales of The Week (due, perhaps, to pre-sale marketing cutbacks), and low profit margins in e-commerce.
Exponent will fancy its chances of turning those negatives round and getting strong growth from the company built over 40 years by the late Felix Dennis whose amazing Heart of England Forest charity is selling the company. Exponent has previously scored with media buy-outs for educational company TSL (now owned by TPG), BBC Magazines (now Immediate Media, owned by Burda), database firm Gorkana and coupon brand Wowcher! (ex Daily Mail).
Exponent, which expects to complete the acquisition-MBO during August, won the auction by out-bidding DMGT, Future, and private equity firms Inflexion and HIG. The estimable Dennis CEO James Tye and his sprightly team will count themselves lucky not to have been swallowed up by an existing management, even before cashed-up executives from TES and Immediate give a good rap to the nice guys at Exponent. Felix Dennis was always one to watch. Now, his legacy company is a must-see.
