There is some big M&A news in the media space this morning. Time (TIME) has agreed to be acquired by Meredith Corp. (MDP) for $18.50 per share in cash. Time had closed on Friday at $16.90, so it's a 9% premium. However, there were news reports of a possible deal over the past ten days or so. As such, the $18.50 price represents a 46% premium to the closing price on November 15, the day prior to media reports about the transaction. So it's a big premium to when the reports started hitting the wires. But today they made it official.
The total deal is worth approximately $2.8 billion, including the assumption of debt and net of cash acquired. The transaction has been unanimously approved by the Boards of Directors of Meredith and Time, and is expected to close during 1Q18. Upon closing, it's expected that Time CEO Rich Battista will leave the company.
You might think that's a lot to pay for Time Magazine, but the company actually owns a number of well-known media brands, including PEOPLE, TIME, FORTUNE, SPORTS ILLUSTRATED, INSTYLE, REAL SIMPLE, SOUTHERN LIVING and TRAVEL + LEISURE, as well as approximately 60 international brands. It's not just print media, Time offers many media platforms and extensions, including digital video, OTT, television, licensing, international markets, paid products and services and celebrated live events, such as the TIME 100, FORTUNE Most Powerful Women, PEOPLE's Sexiest Man Alive, SPORTS ILLUSTRATED's Sportsperson of the Year etc.
Meredith is a media company that uses multiple distribution platforms, including broadcast television, print, digital, mobile and video. Its Local Media Group includes 17 television stations reaching 11% of US 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 National Media Group reaches 110 million unduplicated women every month, including more than 70% of US Millennial women. Meredith creates 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 US and at walmart.com.
In sum, while news of a possible deal broke a couple of weeks ago, this deal had actually been in the rumor mill for years and it has been reported that MDP had approached Time on several occasions over the past few years. There was a time when Time Magazine reached millions of readers, but the company has struggled since the Internet came along which has caused a shift in how consumers get their news. It probably makes sense for them to get folded into a larger media company.
Time's impressive media brands will really bulk up MDP's media division. In fact, the deal has led to speculation that the boosting of MDP's media properties may allow it to separate its media and broadcasting divisions in the future and let them each trade on their own.