InterMedia Puts Faith In Christian Books Publisher –

Christian books publisher Thomas Nelson wants to be more private about its religion.

InterMedia Partners agreed on Feb. 21 to pay $29.85 per share, a 21% premium, for Thomas Nelson, in a $473 million transaction. Believing itself to be the largest publisher of Christian books in the country, the 45-year old company distributes its books throughout the world, where Christianity reaches almost every corner. Its book are in every continent, save Antarctica. The company, which has about 600 employees, publishes under several brand names including, Tommy Nelson, Nelson Current and Nelson Electronic and Reference.

The deal works out to a 13.6x trailing EBITDA multiple and a 2x sales multiple, based on Thomas Nelson’s figures for its year ended March 31, 2005. For that period the company posted $34.6 million in EBITDA on $237.8 million in revenue, versus an EBITDA figure of $29.2 million and $22.6 million in sales in 2004.

Almost all Bibles published in English are one of 14 translations, of which 13 are protected by copyright laws. The King James Bible, completed in 1611, is the only exception. Thomas Nelson owns the rights to three of the nine different translations it uses, and the proprietary translations generated 41% of its revenue in fiscal 2005. Its proprietary Bibles are the New King James Version, The International Children’s Bible and the New Century Version, all copyrighted in the early 1980s. In all, it publishes about 3,400 different Bibles and biblical reference products that sell not just in Christian bookstores, but also at retailers like Wal-Mart and Barnes & Noble.

Another major source of income is Christian-themed books. Perhaps Thomas Nelson’s biggest news is the planned release of what it calls evangelist Billy Graham’s “magnum opus.” The book, “The Journey: How to Live by Faith in an Uncertain World,” is set to be released this month.

Sam Moore, who founded the company in 1961 and controls one third of the voting rights, called the sale of his company “bittersweet.” Michael Hyatt, who will continue with his management team as president and chief operating officer, also said he’ll miss the public realm.

But going private has a number of advantages, Hyatt said in a conference call the day after the deal was announced.

Being private will allow the company to focus on longer-term strategies, not having to respond to the quarterly demands of the public market place, and also will reduce Sarbanes-Oxley-type expenses of public companies. Hyatt added that being public is something of a competitive disadvantage, since it is a “glass house” compared to its competitors, whose earnings, revenues and businesses are largely invisible since they are either privately held or are divisions of larger corporations.

All Hyatt would answer to questions about the review of strategic alternatives was, “I can confirm that the special committee ran a thorough and appropriate process.” The company’s stock has stayed at a reasonable spread under the deal price. It hit a high of $29.54 the day following the transaction, but hasn’t moved higher since. At press time, it was trading at $29.24. The company expects the vote will take place in May or early June.

InterMedia Partners is the brainchild of YES Network founder, Leo Hindery. Hindery invests along with Peter Kern, who is formerly of Alpine Equity Partners LP. A spokesman for InterMedia said the firm is in a quiet period due to its fundraising process and wouldn’t comment.

This is InterMedia’s seventh fund and the first after a brief hiatus from private equity that Hindery took to work on YES. The firm was originally founded in the late 1980s. The current fund has had a first close.

InterMedia looks for mid- to large-sized investments ($50 million to $100 million in equity) in media areas it believes have been ignored. It is not focused on investing in entertainment assets and its targets typically don’t have as much competition from private equity, since they are not able to support lot of leverage. Former South Dakota Senator Tom Daschle is on its advisory board, as is Caryn Mandabach, who produced “The Cosby Show” and “That Seventies Show.”