While larger, higher-profile deals in b-to-b media—Primedia Business Magazines & Media and Advanstar Communications—are progressing slowly, Jupitermedia Corp. on Tuesday announced an agreement to sell a portion of its b-to-b properties.
Darien, Conn.-based Jupitermedia has signed a definitive agreement to sell its Search Engine Strategies (SES) trade shows, SearchEngineWatch.com Web site and ClickZ.com network of Web sites to London-based Incisive Media for $43 million in cash, subject to certain post-closing conditions. Jordan, Edmiston Group, a media investment bank, represented Jupitermedia in the deal.
"SES has all the hallmarks we look for in our acquisitions," said Tim Weller, Incisive Media’s CEO, in a statement. "This is a high-margin business with robust core earnings, and it is a market leader in a strong and rapidly growing global market niche," he continued.
In a conference call, Alan Meckler, Jupitermedia’s chairman-CEO, said the deal was expected to close as early as Friday. He also said the deal represented an EBITDA (earnings before interest, taxes, depreciation and amortization) multiple of 13.5 times, based on 2004 figures.
One observer, who spoke on condition of anonymity, expressed little doubt that the move would prove a wise one for Jupitermedia. "Alan Meckler has proved that he is very shrewd in choosing his time to sell," the observer said.
Jupitermedia still has a number of online media properties, including Internet.com and EarthWeb.com, which serve the information technology sector; DevX.com for software developers; and Graphics.com for creative professionals. But the move makes it clear that Meckler will focus the company’s efforts on its growing stock image business.
"This sale is evidence of our intent to be even more aggressive in the licensing and distribution of commercial images," Meckler said in a statement. "The funds received from the sale will strengthen our balance sheet and allow us to have greater buying power for more image acquisitions."
Jupitermedia’s JupiterImages division acquired PictureArts Corp. in July for about $63.2 million in cash. Meckler said Jupitermedia plans to use the cash generated from the Incisive Media deal to help pay down the $90 million credit facility Jupitermedia opened with J.P. Morgan Chase Bank in connection with the PictureArts deal. Jupitermedia said the deal marked its seventh major acquisition since June 2003 in the stock image arena. Key acquisitions have included Comstock, Thinkstock and Hemera.
Online images accounted for 58% of Jupitermedia’s revenue in the second quarter, according to the company’s 10-Q recently filed with the Securities & Exchange Commission. In the same period last year, online images accounted for just 33% of the company’s revenue.
The company posted revenue of $33.8 million in the second quarter compared with $17.8 million in the second quarter last year, a gain of 89%. Net income for the second quarter was $7.0 million, double the $3.5 million the company posted in the same period last year.
The sale of these Jupitermedia properties to Incisive Media is one more indication, even in the absence of news on Primedia and Advanstar, that the mergers and acquisitions market in b-to-b media remains robust.