IS NOW THE TIME?
Bronfman-led bid fuels speculation on its future
Time Inc.’s stock surged Monday on news that billionaire Edgar Bronfman Jr. and two other private equity billionaires are sizing up the company to take it private in a $1.8 billion deal.
The $18-a-share offer — first disclosed on nypost.com — was a 30 percent premium above its Friday close of $13.60 a share. After the news, shares jumped 18 percent to close at $16.
Shareholders, who have watched the stock steadily erode from its $23 IPO price in June 2014 are growing restless.
“The ball is in the company’s court now,” said one Wall Street source. “Do they have flexibility to listen to a reasonable offer or are they just stiff-arming?”
The offer actually went to the board in early November and basically died, said one source.
The suitors that included Bronfman, Ynon Kriez and Leonard Blavatnik’s Assess Industries interpreted the “not now” response as a rejection of the overture.
The question now is what is the next move for the publisher of some of the most prestigious magazine brands in the country, including People, Time, Sports Illustrated and In Style.
All it takes is a move by 25 percent of shareholders to call a special meeting.
Among its larger shareholders is activist investor Jana Partners, which has about a 5 percent stake. Jana declined to comment.
“I hope it is the start of something,” said one Wall Street analyst, who is not associated with either of those investors. But he also said he hopes Time Inc. is not holding out for a bid to top the IPO price.
“You just lowered your guidance and fired your CEO,” said the analyst. “I hope that they are going down the path of ‘let’s take a look at this.’ ”
Time Inc. CEO Joe Ripp, who had steered it through the spinoff, stepped down in September citing “health issues” but remains executive chairman.
He was replaced by Rich Battista, who is trying to accelerate the company’s transition to a multiplatform digital company. But the transition is not easy. In his first earnings call, Battista reversed Ripp’s earlier guidance and conceded that in the third quarter that there would be no revenue gain for 2016.
The Bronfman-led bid may only just be the opening salvo and there is some flexibility to raise the offer. Bloomberg said it could go as high at $20 a share.
Others on Wall Street speculate that the Time board could be stalling for more time to see if another suitor appears.
It has long been speculated that Meredith, the owner of TV stations and the publisher of Better Homes & Gardens and Martha Stewart Living, would be able to take out a lot of costs with a merger.
But it is not clear if the Meredith family, which controls the voting stock, is interested in expansion.
It had tried to sell itself to Media General earlier this year, but the deal collapsed.
Time Inc. still had not issued any official comment on the overture.