The proceeds of the sale will be used to pay down Seven West Media’s debt, which was A$688.6 million at December 2018. Seven West Media posted a A$444.4m loss to the Australian Stock Exchange in August.
Bauer Media, the German multimedia conglomerate, has agreed to pay A$40 million cash for Seven West Media’s Pacific Magazines, plus A$6.6 million of advertising for SWM with Bauer Media.
Seven West Media and Bauer Media have also entered into commercial arrangements to mutually benefit both parties, including the ongoing production of Better Homes and Gardens television programme, and sharing lifestyle content under a long-term agreement.
Pacific Magazines’ magazine titles include the most-read on-stand magazine in the country, Better Home And Gardens and the sixth most-read on-stand magazine New Idea. Other magazines include Marie Claire, Who, Men’s Health, Women’s Health and That’s Life!.
Bauer Media already owns Australian Women’s Weekly, Women’s Day, Harper’s Bazaar, Gourmet Traveller, Australian House and Garden, ELLE Australia (under licence) and Take 5. The imminent deal will see Bauer Media own all major paid-for magazines in Australia with the magazines once in fierce competition under one roof.
According to Seven’s annual report, Pacific Magazines generated revenue just shy of A$130 million for the financial year, down 7.2% from A$139.5 million the previous year.
The proceeds of the sale will be used to pay down Seven West Media’s debt, which was A$688.6 million of debt at December 2018. Seven West Media posted a A$444.4m loss to the Australian Stock Exchange in August. The sale price of A$40m represents 4.9 times the enterprise value/earnings before interest, tax, depreciation and amortisation (EV/EBITDA) of the business, based on the 2019 financial year.
The sale of Pacific Magazines comes after Seven West Media announced earlier this month that it was intending to merge with regional television affiliate Prime. Seven West Media CEO James Warburton, who has been in the role just a few months, has made known his intention to seek mergers and acquisitions to improve the future of the business.
Warburton said the sale of Pacific Magazines is another step towards ensuring the future of the Seven West Media brand.
“The sale of Pacific Magazines is another major initiative aligned with our strategy to improve balance sheet flexibility and simplify the operating model to enable greater focus on growth initiatives,” he said.
“The team at Pacific have been at the forefront of our group’s transformation and have done a tremendous job at repositioning their business, but there can be no doubt that there is a greater future within a larger scaled magazine group.”
Brendon Hill, Bauer Media Australia CEO, added: “We are delighted to be able to combine our talent and resources with one of our most admired and respected industry peers. More than ever, scale and superior content is emerging as the differentiator of success in publishing. This transaction will bring the Bauer and Pacific teams greater opportunities to innovate, create and collaborate – and continue to delight their audiences.”