PRIMEDIA Acquires Majority Interest in Automotive.com
Transaction Expected to Drive Significant Growth by Combining Automotive.com's Strength in Lead Generation and Search Engine Optimization with PRIMEDIA's Auto Brands, Content, and Advertising Sales Expertise
PRIMEDIA Inc (NYSE:PRM - News) today announced that it has acquired a majority stake in Automotive.com, the premier automotive lead generation business serving new car buyers. As part of the transaction, PRIMEDIA has contributed the valuable assets associated with its 55 automotive Internet sites to Automotive.com.
The purchase price for the majority interest was $72.5 million in cash for the initial 80% stake and the remaining 20% will be acquired no later than early 2010 with the price contingent on the incremental earnings generated by Automotive.com. Following this acquisition, PRIMEDIA's net debt, including preferred securities and expressed as a multiple of Segment EBITDA will be down 1.2 times from the beginning of 2005.
With this transaction, PRIMEDIA gains an immediate leadership presence in the lead generation marketplace--with significant growth potential--and opens new synergies and revenue opportunities for its portfolio of established automotive brands. This transaction also furthers PRIMEDIA's ability to service auto enthusiasts and marketing partners alike through the reach and efficiency of the Internet. Online spend in the automotive category is now estimated to be $1 to 2 billion and climbing at an impressive rate of more than 25% per year.
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