Macquarie Media Group announced Wednesday it has entered into an agreement to acquire 100 percent of American Consolidated Media Inc. and Valley Newspapers Holdings, LP, publishers of 40 newspapers in Texas and Oklahoma.
The acquisition has an enterprise value of $80 million and is subject to regulatory approval and other customary closing conditions.
American Consolidated Media Inc. owns Miami Newspapers Inc., the publisher of The News-Record, the Tri-State Tribune and The PLUS Extra.
“ACM is a very attractive investment for MMG as it meets our key investment criteria,” said Alex Harvey, managing director of Macquarie Media Group. “It provides essential local news and information to the communities in which it operates - some of which are among the fastest-growing regions of the U.S. - has strong positions and long-established histories in those communities and generates stable cash flows from a large, diverse base of local advertisers.”
According to Harvey, the acquisition is part of a broader strategy to acquire and grow a portfolio of community newspaper businesses in the U.S.
“We have identified community newspapers as an asset class which meets our investment criteria - generating stable cash flows from predominantly local advertisers, limited capex requirements and potential for earnings improvement through organic growth and consolidation,” Harvey said.
Of ACM's 40 publications, five are daily newspapers, 19 are weekly newspapers, 16 are “shopper” and specialty publications and associated Web sites.
Those publications provide blanket coverage of eight regions in Texas and one in Oklahoma.
The purchase price and associated transaction costs will be funded by MMG with the proceeds of the refinance of Macquarie Regional Radioworks and the issue of MMG securities to a number of ACM's existing investors.
“The acquisition of ACM provides diversification to MMG stapled security holders' distributions by providing exposure to stable cash flows generated from community newspaper advertising in some of the fastest-growing regions of the United States,” said Tim Hughes, executive chairman of MMG.
“The entire ACM management team eagerly looks forward to our new affiliation with MMG as we execute continued growth and expansion of our local community newspaper platform,” said Jeremy Halbreich, chairman, president and chief executive officer of ACM. “ACM and MMG share the same mission, values and operating philosophies and we believe the MMG strategy for media businesses represents the best and most attractive model for shareholder investors, employees, customers and prospective acquisition targets alike.”
Financial settlement of the acquisition is expected to occur in early February, pending regulatory approvals.
American Consolidated Media Inc. was acquired from a shareholder group including Halyard Capital and Arena Capital Partners, New York-based private equity funds, and BancBoston Ventures, a Boston-based private equity fund.