Wilmington and Centaur look vulnerable

London-listed magazine publishers look vulnerable to takeover offers following a spate of media deals in recent months.

On September 21, Incisive Media agreed to be bought by venture capitalist Apax Partners for £199m (US$375m), or 195p a share, which values the company, which publishes Investment Week and Risk among other titles, at 16.7 times Ebitda.

Meanwhile, Euromoney’s opportunistic offer for Metal Bulletin has just gone unconditional. The international publisher’s £221m (US$411m) bid values the commodities specialist at 16.3 times Ebitda.

Its 400p a share offer trumped a rival bid from Wilmington to merge with Metal Bulletin in an agreed deal, a week before it was to be voted on by shareholders in both companies. This looked likely to go through at about 300p a share.

Now Wilmington has been jilted and with private equity players such as Apax Partners sniffing around, media sector watchers believe that Wilmington, valued at £163m (US$300m), itself looks vulnerable to a bid.

At the same time, another listed magazine publisher Centaur, worth £198m, could tie up with financial training company BPP, with a £223m price tag, according to one market source. Centaur, which has just reported a 64% rise in first half pre-tax profits to £15.1m, publishes the Lawyer magazine.

Chairman Graham Sherren has made no secret of his desire to retire – he is in his mid-60s. A fit with BPP would make sense, as it would combine Centaur’s publishing interests with BPP’s training element. Most rivals, such as Euromoney, already offer both.

Since the announcement of Apax’s offer for Incisive Media, Centaur’s shares have risen 14%. That would suggest that the group could also face an offer from a private equity bidder.

Business-to-business magazine publishers have been out of favour for some time, as advertisers spend more on websites. Private equity bidders have perceived these businesses as being undervalued and have started to move in.

An investment banker in the media sector said: “It’s fair to say that Apax is keen on making acquisitions in this space. Incisive’s chief executive Tim Weller made it clear that up until now he has been unable to do some deals because of the shares’ low rating and the unwillingness of banks to back deals.”

Apparently, one bank would have only lent three times earnings to Incisive on potential deals but seven times earnings to the group if it was owned by Apax, “such is the power of its name”.

The source said: “There are lots of deals for them to do and Incisive could end being a small part of the whole picture.”

Part of the shake-up in this sector has also been driven by the €7.6bn (US$9.7bn) purchase of Dutch media group VNU by a consortium including Blackstone, Carlyle, Hellman & Friedman and KKR.

Following this move, VNU is now in the process of selling 70 unwanted business-to-business titles. The company has appointed Goldman Sachs and a specialist M&A boutique, The van Tulleken Company, to conduct the process.

The division, called Business Media Europe, includes such magazine titles as Accountancy Age and Computing. VNU also runs exhibitions in these areas as well as several recruitment sties.

Stripping out these businesses would allow VNU to focus on its marketing and media information activities in Europe and the US. This Monday the company made an offer to acquire the 40% it does not already own in US-based NetRatings.

One source said that VNU’s unwanted assets could “comfortably” fetch as much as €350m (US$444m). Management, backed by private equity, look the most likely bidders for these titles.