BC Partners Takes Wheel at Auto Trader

BC Partners in July announced the GBP260 million (ecu 383 million) purchase of Hurst Publishing, the privately owned company best known for its Auto Trader titles, the weekly regional magazines for classified automotive advertising that are published in conjunction with Guardian Media Group (GMG).

The UK used-car market has grown by more than 45% since 1992. Auto Trader heads the circulation rankings for car sales advertising titles and has increased its revenue consistently for the past ten years. Hurst and GMG each own four of the 13 regional Auto Trader titles outright; the remaining five are jointly owned by the two groups. In addition, Hurst publishes a range of classified advertising titles for the automotive market in the UK and overseas.

Hurst’s turnover, derived from a total of 52 publications with combined average weekly sales of more than 700,000 copies, increased 22% to GBP72 million in the year to March, while its operating earnings grew by 30% to GBP20.5 million.

BC Partners acquired Hurst from its founders John Madjeski, better known as the chairman of Reading football club, who owned two thirds of the company, and Paul Gibbons. John Madjeski will continue as president of the company. The owners were prompted to sell by the increasing importance of electronic publishing, an area in which they felt they lacked the necessary expertise. The Auto Trader Web site is currently the most visited classified advertising Web site in the UK.

BC Partners has considerable experience in the media sector. As well as forming part of the consortium that acquired Italy’s “Yellow Pages” in the giant OTTO/SEAT deal last year, the group has previously invested in regional newspaper and outdoor advertising businesses. More recently, BC Partners has expressed interest in other major media transactions including Future Publishing, which was clinched by Apax Partners, and IPC Magazines, which eventually went to Cinven.

BC Partners, as is its wont, has disclosed few details of the buyout’s funding structure. Deutsche Bank is providing senior debt and working capital, and raised GBP57 million of the debt requirement through a sterling high-yield bond issue in the week following completion. BC Partners initially planned to raise GBP60 million through the bond issue, but reduced the offer in the face of weak market conditions. The bond issue, the first high-yield offering Deutsche Bank has led, was sold largely to UK institutions.

Senior partner Simon Palley, who led the deal, said BC Partners plans to continue to invest in the company, in particular to develop its Internet capability and to support newly launched publications. The new owners will work to expand the company along three principal axes: advertising publications in the UK; overseas titles; and the further development of Internet publishing and digital broadcasting.

BC Partners has teams in London, Paris, Milan and Hamburg. Although the group has participated in seven buyouts with an average transaction value of more than GBP450 million since the start of 1996, the Hurst acquisition is the first deal led out of the BC Partners’ London office since Nutreco four years ago.

The transaction also marked the first investment for BC European Capital VI, which closed last October on ecu 1 billion.