AOL Time Warner has resumed discussions over a possible takeover of IPC.
Discussions between AOL Time Warner and IPC Media have been on and off for months. Now the talks are back on and it looks like the two companies are making headway. AOL is believed to be offering in the region of $1.5-1.75 billion for the publisher of titles such as Loaded and Woman’s Weekly. A final decision is expected next Thursday.
Talks between AOL and IPC are believed to have stalled in the past because the two companies were unable to agree on a price. Venture capita group Cinven, which controls IPC, is keen to sell but wants to ensure a suitable return on investment. Cinven has spent around $1.5 billion on the company and a sale for the expected price would provide a reasonable profit.
The deal would be AOL’s first major European acquisition. In May, Steve Case and Gerry Levin, the top two executives at AOL, announced a strategy to establish a firm international base within the next ten years. They specified that at least half of the company’s revenues should come from sales outside the US. Currently, only around 17% of revenues come from overseas sales. International expansion would help compensate for the group’s slowing US sales growth.
Over the last few months, AOL has been looking hard for potential purchases. In December it bought Times Mirror’s Magazines for $473 million and earlier this year paid an initial $48 million to Future Network for Business 2.0. IPC is an attractive target, having suffered little from the market downturn in advertising expenditure. Its content would also fit well on AOL’s online portals, increasing their UK visitor numbers – and at the same time, there would be useful opportunities to cross-promote AOL’s Internet products in IPC’s magazine.
Cinven wants to sell, and AOL wants to buy. As long as they can agree on a price this time, the takeover will be a sound strategic move for the media giant.
