Sanoma acquires Alma Media’s regional news media business
08-05-2020 08:43:00 | Editor: Bob Koigi | hits: 202 | Tags:

European media company Sanoma Group has announced that it has now finalized the acquisition of Alma Media’s regional news media business in a process that was announced in February and received unconditional nod from the Finnish Competition and Consumer Authority in March.

The specific Alma Media stables that have been acquired include Alma Media Kustannus Oy, the publisher of leading regional newspapers Aamulehti and Satakunnan Kansa, and thirteen local newspapers in Tampere region, Western Finland and Central Finland. Others include Alma Manu Oy, provider of printing services with a state-of-the-art printing facility in Tampere.

The subscription of the acquired titles cumulatively stood at 185,000 as at 31 March 2020 with an estimate 15 per cent of the subscriptions already being digital-only. Subscription sales comprise of approximately 60 per cent and advertising sales 40 per cent of the total net sales of the acquired business. The 365 employees working in the acquired business will with the closing become employees of Sanoma Group.

Susan Duinhoven, President and CEO, Sanoma: “I am enthusiastic and honoured to welcome Alma Media’s strong regional news teams and brands with more than 140 years of success in high quality independent news media to Sanoma. We are well prepared to work closely together and look forward to learning the best practises from each other. In the current times with the corona pandemic, independent journalism and news media play a more important role in people’s everyday life than ever. We can secure its vitality for future generations by joining forces. Together we ensure the attractiveness of our digital news media products and can further accelerate growth of our combined digital subscription base.”

Sanoma estimates that, on top of the approximately €5 million cost savings related to the delivery outsourcing agreement that came into effect on 1 January 2020, the acquisition will create net annual synergies of an estimated €13 million.

These synergies are expected to be realized in full in 2022 and mainly relate to operational efficiency, procurement and IT, as well as shared operations and support functions.

The Cash and debt free purchase price of the acquired business was €115 million, including approximately €37 million of net debt and advances received, and it was paid at closing. The enterprise value represents an EV / pro forma adjusted EBITDA multiple of 5.8 including the impact of the delivery outsourcing agreement, and 3.5 including also synergies. Sanoma has financed the acquisition with funds received from the divestment of Sanoma Media Netherlands, which was completed on 20 April 2020.

Sanoma will book approximately €10 million of transaction and integration costs as items affecting comparability in Sanoma Media Finland’s 2020 result, of which €1 million was booked in the first quarter of 2020. The transaction was completed earlier than estimated at the moment of signing, which has increased the estimated integration costs in 2020 significantly.

In addition to the IACs, approx. €3 million of additional operational costs related to transitional service agreement are expected for the first 7 months after closing. Taking into account the operating cash flow of the acquired business and costs related to the transaction, Sanoma expects the acquisition to have a neutral impact on its free cash flow in 2020.

The acquired business is reported as part of Sanoma Media Finland SBU since May 2020.

www.sanoma.com