PETERSEN SALE ATTRACTS FLOCK OF POTENTIAL BUYERS;WINNING BID COULD REACH $400 MILLION; K-III CALLED THE FAVORITE

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The bidding war for Petersen Publishing Co. is expected to heat up now that a slew of potential suitors are eyeing the black books of key financial data.

Goldman, Sachs & Co. is handling the auction and has set a deadline of June 21 for the return of first-round bids.

PRICE: UP TO $400 MILLION

Most observers expect a sale will be completed by late summer, with a final price tag estimated to be anywhere from $300 million to $400 million, more than 10 times cash flow.

"I think they will go for a lot of money," said Michael J. Wolf, partner and head of media/entertainment at consultancy Booz, Allen & Hamilton, New York.

The privately owned company, founded by car buff Robert E. "Pete" Petersen in 1948 when he launched Hot Rod with only $400, today includes a diverse mix of special-interest magazines, including Motor Trend, Drag Racing, Sport, 'Teen, Sassy and about 20 other monthlies.

Mr. Petersen, now 69, has said he hopes to sell the magazines as a block to a single buyer.

Industry executives who have seen the books said the company last year had revenues of $215 million with cash flow of approximately $21 million. Factoring out startups and unprofitable one-shots, cash flow was $31 million.

MYRIAD SUITORS

Among those expected to take a serious look: Boston Ventures; Peter Diamandis, through his new investment company Paladin Holdings; and Claeys Bahrenburg, who is plotting a return to publishing with backing from Lehman Brothers.

Also in the running are established publishers K-III Com-munications; Times Mirror; American Media; and Meigher Communications, among others.

Hachette and Walt Disney Co. are expected to stay out of the process, but could come back if individual titles are sold separately.

K-III THE FAVORITE

K-III Communications-seen by many observers as the favorite-has made little secret that it is strongly interested in acquiring the titles and recently improved its cash position with the refinancing of $1.25 billion in debt.

The Petersen titles could give the company-backed by Kohlberg Kravis Roberts & Co.-critical mass in a number of areas, including car titles, where Motor Trend would become the flagship for the 50 specialized titles picked up from McMullen & Yee.

Most of those titles are circulation-driven with few ad pages, giving the company a strong incentive to buy one of the market leaders and create ad package deals.

Similarly, Sassy and 'Teen could be repositioned to support K-III's market leader, Seventeen, one of the company's cash cows.

Contributing: Bradley Johnson.

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