SanomaWSOY and the Dutch-based media and information group, VNU, have signed an agreement under which SanomaWSOY will acquire VNU's Consumer Information Group, CIG. The acquisition is valued at EUR 1.250 billion (enterprise value), and the expectation is to close the deal at the beginning of October this year.
SanomaWSOY will finance the acquisition through senior bank loans totalling EUR 1.2 billion fully underwritten by Goldman Sachs and Nordea. To maintain its financial flexibility, SanomaWSOY's Board of Directors intends to propose to an Extraordinary AGM to be convened in August that a convertible capital note valued at a maximum of EUR 250 million be issued later this year.
The acquisition will result in the formation of a new force in European magazine publishing, combining CIG, which is Europe's fifth-largest magazine publisher, with SanomaWSOY's Helsinki Media, which is Finland's largest magazine publisher. The transaction excludes VNU's holdings in CVI Media Group, based in The Netherlands, and Independent Media Holding, based in Russia.
CIG had net sales of EUR 816 million in 2000 and an EBITDA of EUR 143 million; while Helsinki Media had net sales of EUR 160 million and an EBITDA of EUR 17 million in 2000. The combined SanomaWSOY-CIG will have pro forma net sales of EUR 2,264 million (2000), and an EBITDA of EUR 313 million (2000). The transaction will generate around EUR 1.15 billion of goodwill for SanomaWSOY, which plans to amortise this over a period of 20 years.
As part of the acquisition, SanomaWSOY will set up a new magazines sector responsible for the operations of CIG and Helsinki Media, to be based in The Netherlands. Theo Bouwman, currently a member of VNU's Executive Board with responsibilities that include CIG, will be appointed President of the new sector, and Managing Director of its Dutch parent company; he will also join SanomaWSOY's Management Group. Eija Ailasmaa, currently President of Helsinki Media, will be appointed Executive Vice President of the new sector. Eija Ailasmaa will continue to head Helsinki Media.
"The deal with VNU represents a major strategic milestone for SanomaWSOY," according to Jaakko Rauramo, the Group's Chairman & CEO.
"When SanomaWSOY was established in 1999, we set ourselves a series of ambitious growth targets designed to develop our businesses internationally and build on our existing strengths. These included increasing our net sales to EUR 2.5 billion by 2005 and achieving at least 20% of net sales from international operations by 2003.
"The acquisition will bring a major new international dimension to our portfolio," continues Rauramo, "strengthen our core magazine publishing business, and bring us valuable additional strong cash flow. The titles and businesses that we are acquiring will give us a presence on a number of new markets for us, and open up new opportunities not only for our magazine businesses, but for our other activities as well - and provide an excellent platform for our future development as a truly European media player."
SanomaWSOY's President & COO, Hannu Syrjänen, continues: "With net sales of around EUR 1 billion in 2001, the combination of Helsinki Media and CIG will take SanomaWSOY from being Finland's leading magazine publisher to being the leading magazine publisher in five European countries, and a particularly strong force on the region's smaller and medium-sized markets.
"Together, the two businesses will be able to benefit from increased benefits of scale, the capability to develop common systems, cross development of titles and content, and shared best practice. One of the clear opportunities here will be to leverage the opportunities that exist between magazine publishing and distribution. Following the deal, we aim to concentrate on enhancing profitability in all our units. We also plan to divest some of our non-core assets at an appropriate time."
Commenting on the agreement from VNU, Rob van den Bergh, Chairman of VNU's Executive Board, says: "We believe that we have found an excellent owner for our consumer magazines in SanomaWSOY. While being committed to divesting this business from a strategic point of view to concentrate on marketing and media information, business information, and directories, we prioritised securing a buyer that would be committed to developing the magazines in question in the future. We are convinced that SanomaWSOY has the capability to do this."
VNU's Consumer Information Group, CIG, publishes over 250 magazines in seven countries and is the market leader in The Netherlands, Belgium, Hungary, and the Czech Republic. The SanomaWSOY acquisition covers VNU Tijdschriften in The Netherlands; Mediaxis in Belgium; VNU Magazines, with operations in five European countries; and Aldipress, the leading magazine sales and distribution company in The Netherlands. CIG's magazines have a wide audience, ranging from pre-school children to senior citizens. CIG employs over 3,500 people.
Helsinki Media is one of SanomaWSOY's five sectors and is Finland's market leader in women's and family magazines, professional and home computer magazines, and comics. Helsinki Media is also Finland's leading publisher of corporate publications and corporate directories; and publishes three magazines in Sweden. Helsinki Media employs some 810 people.
Following the acquisition, SanomaWSOY will become the Nordic region's largest media company in terms of net sales.
SanomaWSOY has been advised by Goldman Sachs.
SanomaWSOY will arrange a press conference in Finnish for the press and analysts at 13.00 Finnish time in Sanoma House in Helsinki. A press conference in English will be arranged in the Hilton Amsterdam in The Netherlands at 12.00 CET; and an international conference call in English at 15.00 Finnish time.
Those wishing to participate in the Finnish press and analyst conference should call Reception at Sanoma House on +358 9 122 609. Those wishing to take part in the conference call, should contact +44 208 515 2308, and refer to the title of the call 'Sanoma-CIG'. Please note that only sell-side analysts will be able to ask questions at the conference call.
Further information on the transaction can be found at www.sanomawsoy.fi.
For interview requests, please contact:
Chairman & CEO, Jaakko Rauramo (Peter Herring: tel. +358 40 820 2899)
President & COO, Hannu Syrjänen (Pirjo Granqvist: tel. +358 105 19 5020)
President, Helsinki Media, Eija Ailasmaa (Peter Herring: tel. +358 40 820 2899)
Vice President, Investor Relations and Group Communication, Raija Kariola (Päivi Korteniemi: tel. +358 105 19 5060)
Investor Relations and Group Communications