News Corp acquires world's largest romance-books publisher Harlequin
03 May 2014
News Corporation yesterday said it had acquired romance-books publisher Harlequin Enterprises for around $455-million, payable in cash at closing.
The transaction, which has been unanimously approved by the Torstar board of directors, is subject to customary approvals and closing conditions, including regulatory approvals. The transaction is expected to close by the end of the third quarter of 2014.
The transaction is also subject to the approval of Torstar's Class A shareholders. The voting trustees of the Torstar Voting Trust, which controls approximately 98 per cent of the Class A voting shares of Torstar, have entered into a voting support agreement pursuant to which they have agreed irrevocably to vote all Class A shares under the Voting Trust in favour of the transaction at a special meeting of shareholders of Torstar to be called to approve the transaction.
The board of directors of Torstar is recommending that holders of Torstar's Class A shares vote in favour of the transaction.
Harlequin was founded in 1949. Torstar acquired a controlling interest in Harlequin in 1975 and acquired the remaining interest in 1981. Today, Harlequin is a leading publisher of women's fiction, with titles issued worldwide in 34 languages and sold in 102 international markets.
Harlequin publishes the work of more than 1,300 authors and releases more than 110 titles monthly through publishing operations in 16 countries, either through wholly-owned operating units or joint ventures. Approximately 95 per cent of Harlequin's revenues are from outside of Canada.
According to News Corporation, Harlequin's international presence made the company especially attractive.
But like the rest of the book publishing industry, Harlequin was dealing with falling revenue and income, a product of the continuing shift toward digital books. The mass-market, grocery-store paperback, long the company's bread and butter, has been on the wane for long.
In 2013, Harlequin had total segment revenues of $398 million and segment EBITDA of $56 million, which accounted for 29 per cent and 32 per cent of Torstar's consolidated revenues and EBITDA (on a segmented basis) respectively.*
News Corporation's purchase of Harlequin comes as its largest acquisition since the company separated from the more lucrative film and TV business, 21st Century Fox, last summer.
The addition of Harlequin, which would become part of the company's HarperCollins book unit, was consistent with the company's broader strategy of investing more heavily in the publishing industry.
"Harlequin is a perfect fit for the new News Corp, vastly expanding our digital platform, extending our reach across borders and languages," said Robert Thomson, CEO of News Corp, in a statement.
According to News Corp, the deal would expand HarperCollins' footprint particularly into Europe and Asia Pacific, and would give HarperCollins "an immediate foothold" in 11 new countries.
About 40 per cent of Harlequin's revenues came from books published in languages other than English, however 99 per cent of HarperCollins books are published in English.
