The £24 million will be split as follows: £22 million in cash on completion and £2 million in cash on 20 April 2017.
The acquisition would, says Johnston Press, create the UK's fourth biggest news publishing group, centred around a handful of leading brands (by circulation), selling the equivalent of over 600,000 copies a day predominantly outside London.
According to Johnston Press, the transaction highlights are:
* Acquisition of i, comprising the goodwill relating to the i business; the benefit of certain trading contracts; and stocks of newsprint and the Business Intellectual Property Rights;
* The Acquisition is expected to be immediately earnings enhancing;
* Consideration of £24 million represents 4.6x i’s unaudited “carve-out” operating profit of £5.2 million in the year ended 27 September 2015;
* The £24 million consideration will be satisfied from the Group’s existing cash resources. Following the Acquisition, the Enlarged Group is expected to have pro forma leverage of around 3.2 times EBITDA;
* The Directors believe that the i will provide strong cash generation, which in turn will provide financial flexibility for continued investment in digital and regional areas of the UK within Johnston Press' core strategic focus; and
* Expected cost savings and revenue synergies are to provide additional benefits.
… and the acquisition benefits are:
* The Directors believe that the combination is a strong strategic fit. i will help build the Group’s national print and digital display advertising revenues through access to a number of strategically important local markets and the large and attractive ABC1 demographic category which comprises 77% of i’s readership, as well as a number of blue chip advertisers, the majority of whom do not currently advertise with Johnston Press’ titles;
* Increased scale and contribution of circulation revenues. i's circulation revenue grew at 24% year on year in 2015 and accounted for 64% of its total revenues in the financial year to 27 September 2015 (the equivalent figure for Johnston Press in the financial year to 3 January 2015 being 29%). This higher proportion will help Johnston Press to stabilise its combined circulation revenues;
* Accelerating growth of digital audiences and digital revenues. i does not currently have a standalone website. The Directors believe this offers an opportunity to launch and develop digital products associated with i’s brand using Johnston Press’ network, and will help grow the 1XL digital advertising network; and
* Developing primary news brands. The Directors believe that the acquisition of i would build strength into the existing portfolio of Johnston Press’ brands, such as The Scotsman, The Yorkshire Post and (the Belfast based) Newsletter, enabling the Group to offer a package of "premium brands" to the market.
Ashley Highfield, Chief Executive of Johnston Press said, “This is a transformational acquisition for Johnston Press and an important step towards delivering our long-term strategy. i is a highly regarded newspaper with a clear market position and a loyal readership. By joining with Johnston Press the combined circulation will be equal to 9% of national daily circulation, making us the fourth largest player in the market. This enhanced reach represents a significant growth opportunity for Johnston Press in terms of national print and digital advertising revenue. It also rebalances our revenues towards less volatile circulation revenues.
“With our considerable digital experience the combination of Johnston Press and i will also allow us to grow digital audiences and revenues through the creation of inews.co.uk.
“We are delighted with the positive reaction of Shareholders to the deal and are excited by the opportunities this acquisition brings. We look forward to working with the team at i as we deliver the next phase of Johnston Press strategy.”
Steve Auckland, CEO of ESI Media, added, “We are incredibly proud of the success of i since its launch in 2010. In just five years, i has changed the face of national newspapers, demonstrating that you can innovate in print.
I would like to thank everyone who has contributed to the success of i for their dedication, ingenuity and creativity. A magnificent team effort!”
