April 29, 1999UNITED NEWS & MEDIA ACQUIRES CMP MEDIA CREATING A WORLD CLASS BUSINESS TO BUSINESS HIGH TECH INFORMATION COMPANY
London--United News & Media plc (UNWS.L; NASDAQ: UNEWY) and CMP Media Inc.
(NASDAQ: CMPX) announce the signing of a definitive agreement by which United
will purchase CMP, a leading US technology media company, for $39 per share, a
net total cash consideration of $920 million (after deducting cash on hand of
Members of the Leeds family and related trusts and foundations, holding in
excess of 68 per cent of CMP Media's fully diluted outstanding stock, have
agreed to tender their shares.
The combination of CMP's publishing and Internet assets with the trade show and
publishing businesses of United's wholly owned subsidiary, Miller Freeman, will
transform Miller Freeman into one of the leading market focused business media
groups serving the US and global high tech sector. The acquisition also
represents a major step forward in Miller Freeman's strategy to become a leading
online provider of business-to-business products and services for the technology
The acquisition of CMP:
- Creates a world-class high tech information business
- Includes 10 leading high tech publications in the US
- Includes CMPnet, a major online technology brand
- Combines the complementary skills of CMP and Miller Freeman
- Presents significant opportunities for yield improvement and new
- Provides an outstanding Internet opportunity, with external financing
planned by end of 1999
- Will be earning per share neutral in 2000, before investment in CMPnet,
and strongly enhancing thereafter.
Following the acquisition all CMP and Miller Freeman high tech products will be
brought under a single CMP brand and management structure.
CMP has a worldwide network of leading brands and owns many of the most
important names in computing and electronics print publishing including
InformationWeek, Computer Reseller News (CRN) and Electronic Engineering Times
(EET). It also operates 40 leading online sites such as TechWeb under the CMPnet
brand. In addition, CMP has a number of information-rich database, conference,
research and product-testing businesses. In 1998 CMP's revenues were $478
million and EBITDA was $29 million (depreciation and amortization were $13
million). Net assets at 31 December 1998 were $108 million.
THE US HIGH-TECH SECTOR
The high tech sector in the US is the largest business-to-business market. In
1997 technology represented an estimated $3.5 billion, or 44 per cent of total
business-to-business advertising, roughly equal to the next nine largest sectors
combined. The sector has also outgrown all other business publishing sectors,
achieving an average annual growth rate of 13 per cent from 1984 to 1998. Y2K
and the Asian crisis have temporarily dampened trade advertising growth, but the
fundamentals of the high tech sector--high rates of product innovation and use
of trade media to deliver vital product information--ensure the prospects for
advertising, exhibition and Internet revenues are very attractive.
CMP and Miller Freeman have highly complementary skills and market positions.
CMP's main products are market leading newspapers and magazines while Miller
Freeman has expertise in trade shows and leading niche publications. CMP's
leading controlled circulation titles serve advertisers and reach the most
influential readers in the electronics market (EET, Electronic Buyers News), in
the reseller channel (CRN, VARBusiness) and in the end-user market
(InformationWeek, Network Computing, tele.com, Data Communications, InternetWeek
and WINDOWS). Miller Freeman has strong show and magazine positions in
electronics (including Embedded Systems and the recently acquired Verecom
products) and in the fast growing applications for vertical business
communities, such as Computer Telephony. CMP's powerhouse weekly,
InformationWeek, and Miller Freeman's largest show, PC Expo, are a natural
MILLER FREEMAN'S PLANS WILL DELIVER SIGNIFICANT PROFIT GROWTH
There is a major opportunity to develop new products and revenue lines from the
exploitation of CMP's and Miller Freeman's combined high tech advertiser and
user databases, the cross-promotion of products, and the use of CMP's `platform'
titles to launch new conferences and shows on a worldwide basis. Miller Freeman
has a successful record of integrating major acquisitions and, in partnership
with strong incumbent management, building new revenue streams. The merger of
support functions, overhead reductions and the elimination of operating losses
are expected to boost profits by $40 million in 2000.
Investment in CMPnet will create the leading operator of online vertical
communities servicing the business-to-business high tech sector. The brands
already include TechWeb (one of the first-ever technology dedicated sites on the
web), the EDTN Network and ChannelWeb (portal sites for the electronics industry
and channel resellers). All these sites have joint ventures or well-established
plans for adding e-commerce revenue streams to their rapidly growing advertising
revenues. Miller Freeman will add its own online web/software development and
computer telephony content and audiences.
The merged online businesses are expected to achieve revenues of $35 million in
2000, and to grow rapidly thereafter as the investment in e-commerce bears
fruit. United plans to investigate external funding options for the online
business by the end of 1999.
The terms of the agreement, which is expected to close in 25 business days, are
subject to certain standard regulatory approvals, including a filing under the
Hart Scott Rodino Antitrust Improvements Act of 1976.
The acquisition will be funded from United's banking facilities. Through the
combination of improved operating efficiency, loss elimination and yield
improvements, the acquisition is expected to have a neutral impact on United's
earnings per share in 2000, before investment in the online business.
Thereafter, as a result of the expected resumption of growth in the market,
investment in new product launches and growth of the online business, it is
expected to enhance earnings strongly. United intends to raise operating margins
to the 20 per cent achieved in comparable businesses by Miller Freeman. It is
intended to fund future investment in the online business by external financing.
On a pro forma basis, the effect of the acquisition is to increase the
contribution of United's business services division from 43 per cent to 50 per
cent of group revenues in 1998, and the proportion of group operating profits
earned in the US from 39 per cent to 45 per cent.
The estimated transaction and restructuring costs associated with the
acquisition result in an exceptional item in the profit and loss account of $65
million after tax and an additional $65 million goodwill in the group balance
Clive Hollick, Chief Executive of United News & Media, said:
"The acquisition of CMP is a major step in United's strategy of establishing
leading positions in fast growing business-to-business markets. CMP provides
Miller Freeman with an ideal platform for the development of new products and
publications in the US. CMPnet, for which we intend to seek external financing
later this year, is well placed to capture the explosive growth in online
advertising and e-commerce."
Tony Tillin, CEO of Miller Freeman, said:
"The Leeds family has over 28 years built some of the most powerful brands in
the technology publishing sector. Miller Freeman and CMP are a terrific
combination. Together with our existing trade shows, publications, web sites and
databases, CMP's strong leading brands will allow us to service all businesses
in this market using the widest rage of media. CMP brings with it a wealth of
talent in its staff, and, like Miller Freeman itself, places enormous value on
the contribution which they make to the successful growth of a world-class media
Michael Leeds, President and CEO of CMP Media Inc., said:
"I am extremely proud of CMP's growth over more than a quarter of a century. Now
we will benefit from the diverse assets of Miller Freeman as our products and
people contribute to the fulfillment of Miller Freeman's mission to become the
fastest-growing and most respected provider of business-to-business information
and media in North America. This acquisition makes sense from both business and
cultural perspectives. Miller Freeman's strong trade show business and
leadership in vertical markets will enable CMP's customers to reach their
audiences more effectively through a richer and more diverse media mix, and CMP
will immediately position Miller Freeman as a leader in the business-to-business
technology media. I am delighted that CMP is joining another company that, like
us, strives to create a terrific work environment and is a real contributor to
the communities it lives in."NOTES TO EDITORS
United News & Media is an international media and information group based in the
UK with three main divisions. Its BUSINESS SERVICES division contains Miller
Freeman, the international market research company United Information Group, PR
Newswire, the world's leading distributor of full text news releases, and
leading photo library VCG. Its UK BROADCASTING AND ENTERTAINMENT interests
include ITV licenses Meridian, Anglia and HTV, a 29 percent stake in Channel 5,
and a fast-growing production business. In CONSUMER PUBLISHING it owns Express
Newspapers and advertising publications in the UK, as well as UAP Inc., the
leading publisher and distributor of free pick-up advertising publications in
the US. Further information may be found at HTTP://WWW.UNM.COM.
A wholly owned subsidiary of United News and Media plc, MILLER FREEMAN is the
world's largest trade show organizer and a leading publisher of technical and
industry-specific magazines. With divisions in Asia and Europe as well as the
US, Miller Freeman produces more than 370 exhibitions and conferences and nearly
400 publications including 270 magazines and a growing portfolio of digital
media services. For more information visit the Miller Freeman web site at
CMP MEDIA, INC. is a leading high-tech media company providing essential
information and marketing services to the entire technology spectrum - the
builders, sellers and users of technology worldwide. With its portfolio of
newspapers, magazines, custom publishing, Internet products, research,
consulting and conferences, CMP is uniquely positioned to offer marketers
comprehensive integrated solutions tailored to meet their individual needs.
Online editions of the company's print publications, along with products and
services created exclusively for the Internet, can be found on CMPnet at
HTTP://WWW.CMPNET.COM. NSTL, the company's independent testing lab and
consulting organization, serves government, corporate and technology vendor
clients around the world.
NOTE TO INVESTORS
Some of the statements made in this release constitute forward-looking
statements that involve certain risks and uncertainties. Certain factors may
cause actual results to differ materially from those contained in the
forward-looking statements, including general
market conditions, particularly changes in demand for technology advertising,
the ability of United to integrate CMP into Miller Freeman, new technological
developments, competition, potential acquisitions and divestitures, and other
risks detailed from time to time in United News & Media plc's reports on file at
the Securities and Exchange Commission.
CLIVE HOLLICK United News & Media 44 (0)171 921 5000
TONY TILLIN Miller Freeman 44 (0)181 742 2828
PETER BENNFORS (ANALYSTS) United News & Media 44 (0)171 921 5000
RICHARD SAUNDERS (PRESS) Cardew & Co. 44 (0)171 930 0777
BARBARA KERBEL CMP Media (001) 516 562 5218
Lazard Freres & Co. LLC advised CMP Media Inc.
Allen & Company Incorporated advised United News & Media plc.
Dates Referenced Herein and Documents Incorporated by Reference