Softbank Corp.'s Ziff-Davis is trying to pull a CMP.
Like CMP Media, which put itself on the block in February, Ziff-Davis last week declared itself for sale. The tech media company--which publishes 28 titles including PC Magazine, owns the Comdex computer trade shows and operates the ZDNet technology Web portal--said it retained Morgan Stanley Dean Witter & Co. "to explore strategic alternatives to maximize shareholder value."
CMP Media, whose $920 million sale to United News & Media's Miller Freeman unit closed in June, significantly improved its shareholder value with its deal. Prior to going on the block, its stock was trading below $20 per share; Miller Freeman paid $39 per share.
Ziff-Davis hopes to provide similar results for one shareholder in particular: Tokyo-based Softbank, which owns more than 70% of the company and said it wants to focus its investment on pure Internet plays, such as Yahoo! and E*Trade, on which Softbank has made billions.
UP TO $30 PER SHARE
Mandana Hormozi, a publishing analyst with Lazard Freres & Co., said Ziff-Davis could be worth as much as $30 per share, even taking into account Ziff-Davis' $1.2 billion debt. Ziff-Davis was trading at about half that figure--$14.19 per share--just before its announcement.
Ms. Hormozi said she wouldn't be surprised if Ziff-Davis' properties were divided up among several suitors. She said there are six distinct units within the company: publications, Ziff-DavisNet, ZDTV, trade shows, education and consulting.
"They could sell everything in any combination you could come up with," she said.
In an internal memo to employees, Ziff-Davis Chairman-CEO Eric Hippeau echoed that idea: "We are looking for new strategic opportunities for all or some of our businesses. We do not know yet whether this will result in a change for the entire company or for a select set of our businesses."
Mentioned among the potential suitors are a handful of the usual suspects, including International Data Group, VNU, Penton Media, Advanstar Communications and Miller Freeman. Internet companies, such as ZDNet competitor CNET, may be a Ziff-Davis suitor, said Reed Phillips, managing partner of DeSilva & Phillips, a New York-based media investment banker.
One factor that might dampen a breakup sale is that Ziff-Davis has long trumpeted the strength of its integrated marketing, which offers advertisers the opportunity to market their products and services across a range of media. Splitting up Ziff-Davis's properties could weaken that selling point.
Mike Perlis, president of Ziff-Davis Publishing, said that wouldn't be the case.
"Ziff has agreements and contracts in place," he said. "All of those agreements will continue even if the company is broken up."
Copyright July 1999, Crain Communications Inc.