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Seven West Media agrees to sell Pacific to Bauer Media for $40m

Seven West Media (SWM) has agreed to sell its magazine business, Pacific Magazines, to Bauer Media for a cash consideration of $40m, plus $6.6m of advertising for SWM with Bauer.

Advertising spend commitments and content sharing are believed to be part of the ongoing agreement.

Bauer will pay $40m for the Pacific Magazines business

The deal is expected to be completed by the end of the year, subject to approval by the Australian Competition and Consumer Commission (ACCC). It comes after the plan was revealed earlier this month, with Bauer Media sources telling Mumbrella the agreement was ‘imminent’. 

The proceeds of the sale will be used to pay down SWM’s debt, improving its balance sheet. The company posted a $444.4m loss to the ASX in August. The sale price of $40m represents 4.9 times the enterprise value/earnings before interest, tax, depreciation and amortization (EV/EBITDA) of the business, based on the 2019 financial year.

The deal follows an announcement earlier this month that SWM and Prime intended to merge. Seven CEO James Warburton, who has been in the role just a few months, flagged his intention to hunt for mergers and acquisitions to improve the future of the media business.

As part of the agreement, SWM and Bauer Media have also entered into commercial arrangements, including a $6.6m advertising spend for SWM on Bauer assets over three years. The two companies will also have advertising spend commitments, have agreed to the ongoing production of the Better Homes and Gardens television show and a lifestyle content sharing aspect.

Warburton said the sale is another step towards the future of the SWM brand.

“The sale of Pacific Magazines is another major initiative aligned with our strategy to improve balance sheet flexibility and simplify the operating model to enable greater focus on growth initiatives,” he said.

“The team at Pacific have been at the forefront of our group’s transformation and have done a tremendous job at repositioning their business, but there can be no doubt that there is a greater future within a larger scaled magazine group.”

Brendon Hill, Bauer Media Australia CEO, added: “We are delighted to be able to combine our talent and resources with one of our most admired and respected industry peers. More than ever, scale and superior content is emerging as the differentiator of success in publishing. This transaction will bring the Bauer and Pacific teams greater opportunities to innovate, create and collaborate – and continue to delight their audiences.”

As of yet there has been no confirmation on which key players will follow with the sale, including Pacific boss Gereurd Roberts. Pacific’s titles include Better Homes & Gardens, Marie Claire, New Idea, Who and others.

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