Tuesday, May 15, 2007

Magazine Publisher Is Selling Special-Interest Unit for $1.15 Billion

Magazine Publisher Is Selling Special-Interest Unit for $1.15 Billion

The publisher Primedia said yesterday that it would sell its Enthusiast Media division, which includes magazines like Motor Trend, Soap Opera Digest and Surfer, for about $1.2 billion in cash to Source Interlink Companies, which is controlled by the billionaire investor Ronald W. Burkle through his Yucaipa investment firm.

The unit, which Primedia said in February it would consider selling, includes more than 70 magazines and 90 Web sites. It leaves Primedia with its Consumer Source business, which publishes free consumer guides.

The move comes after Primedia agreed to sell its hunting and fishing magazines to the private equity firm InterMedia Partners for $170 million in cash in December.

Primedia expects $1.15 billion in net proceeds and will be debt-free after the sale.

Source Interlink, which is based in Bonita Springs, Fla., said it expected the all-cash deal to add to adjusted earnings per share excluding one-time costs.

Source Interlink manages retail checkout areas for more than 1,000 retail chains and makes in-store displays. It also manages the delivery of magazines and other entertainment products like DVDs to retailers and consumers.

The deal is expected to close in the third quarter. Source Interlink said Enthusiast Media would operate as a division and would be led by Steve Parr, who heads the group at Primedia.

Primedia said that certain stockholders affiliated with the private equity firm Kohlberg Kravis Roberts & Company who own 61 percent of its shares unanimously agreed to the deal.

Primedia shares rose 34 cents, to $2.83, while Source Interlink shares fell $1.01 cents, to $5.79.

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