Bauer Media and Seven West Media’s Pacific Magazines have finally sealed the $40m deal after weeks of speculation the sale had fallen through amid the coronavirus crisis.
In an ASX announcement, Seven West Media today announced the completion of the sale of Pacific Magazines to Bauer Media, including $40 million in cash consideration, pre-adjustments and leave provisions, as well as $6.6 million in advertising over three years in Bauer publications.
Commenting on the completion of the sale, James Warburton, SWM MD and CEO, said: “We welcome today’s completion of the sale of Pacific Magazines to Bauer Media. The completion of this transaction is a key step as we work to transform SWM.
“I want to thank all the staff at Pacific for their passion, commitment and tireless work over the years at SWM.”
Brendon Hill, Bauer Media Australia CEO, said: “We are extremely pleased to complete the purchase of Pacific Magazines. It will drive the consolidation publishing needs right now to be competitive at what is a very challenging time for our industry. We welcome the Pacific staff to the Bauer Group and look forward to working with them.
“The economic impact of COVID-19 is affecting the entire media industry but by combining Pacific Magazines with Bauer Media Australia, it will create a stronger business with the capabilities to better compete in a digital world.
“The Pacific brands have unique audiences and our combined digital reach will be compelling. We look forward to emerging from the other side of COVID-19 to drive innovation and maximise reach and engagement with our audiences.”
There had been questions over whether or not the deal would actually go ahead since the ACCC approved it, with Bauer reportedly angling for a lower price.
It was reported in April that despite agreeing to a $40 million takeover, Bauer believed Pacific Magazines was valued closer to $20 million.
It was also revealed Bauer stopped the use of freelance journalists and suspended staff expense claims days before the final completion of the sale was due to go ahead.
The cost-cutting measures coupled with the decision to close Bauer’s New Zealand arm and reports its bought EY onboard to review the business locally cast plenty of doubt over whether Bauer would go ahead with the deal.
Seven West Media’s Pacific Magazines then took Bauer Media to court, in an effort to ensure the deal goes ahead at the agreed price.
“Bauer is aware of its obligations under the Sale of Business Agreement and, as you know, has been actively engaged since October 2019 in preparing for completion,” SWM told the ASX at the time.
Following the news of the closure of Bauer’s NZ arm, there were murmurings the same could happen in Australia. However, even if the German company decided to close its Australian arm, Seven West Media would still have been owed the $40 million for Pacific Magazines due to a financial guarantee given to Bauer locally by its German parent.
Bauer Media’s parent company, Heinrich Bauer Verlag KG was understood to have guaranteed the Australian company’s Pac Mags purchase.
The completion of the sale follows Wednesday’s news that due to the impact of COVID-19 in Australia, and the correlated decrease in advertising revenue, it is proposing to temporarily suspend the print publication of certain titles and to restructure parts of the business.
The proposal means that 70 Bauer staff will be made redundant and a similar number stood down.
The affected brands’ digital assets will continue to operate, while the decision to resume print publication will be made once the trading environment improves.
It also follows a tumultuous time for Seven, which went into a trading halt on the ASX early last month and is in the throws of whittling down over half a billion of debt.
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