Family-controlled media group Lagardere announced on 31 January that it is to sell its international magazine business to fellow family publisher Hearst Corporation for €651 million in cash.
The US-based publisher will take control of 102 magazine titles in 15 countries from the US to Hong Kong – a business which had revenues of €774 million last year.
After a month of exclusive talks, Lagardere said in a statement that alongside the sale of the magazine titles, it will also hand over publishing control of Elle magazine to Hearst, but will retain the trademark and the French edition of the magazine.
As part of the deal, Hearst will have access to all print and digital media support and will pay royalty to Lagardere for using the Elle trademark, estimated to be around €8 million.
The deal, expected to close by the third quarter of the year, will benefit both the family-controlled groups. According to analysts, sale of its international business would help Lagardere focus on its domestic publishing and sports marketing. And Hearst would be able to gain more recognition in the fashion and beauty advertising category, an area it has found itself lagging behind the competition.
Through this sale, Lagardere hopes to repay its debt and finance new acquisitions. Last year, Lagardere had been accused by an activist investor of spending shareholders money with “reckless abandon”, leading to an investor revolt. According to the statement, this sale was in line with its strategy to focus on higher growth activities and exit from slower growth segments.
Hearst is one of the US’s largest media companies and owns magazines including Good Housekeeping, Cosmopolitan and the Oprah Magazine. It was founded in 1887 by William Randolph Hearst, and is today headed by chairman and grandson George Hearst Jr. It had 2009 revenues of around €2.7 billion.
Lagardere was founded in 1992 by Jean-Luc Lagardere by bringing together aerospace company Matra and publishing house Hachette. After his death in 2003, his son Arnaud Lagardere (pictured) took over as the head of the business. The company reported revenues of €7.8 billion for 2009.
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