Penton, a diversified media company that publishes print and electronic magazines and runs trade shows, hopes that its acquisition of Mecklermedia will help increase revenues from the trade shows and conferences and expand its global presence.
Penton plans to offer $29 per share for all outstanding shares of Mecklermedia's common stock, which represents a premium of 43.7 percent more than Mecklermedia's closing price yesterday of $20.19. The stock closed today at $26.18, up almost 30 percent on the day.
In a complicated side deal, Mecklermedia chief executive Alan Meckler will retain control of Mecklermedia's online properties, principally its Internet.com Web site.
Meckler will pay an undisclosed price for an 80.1 percent interest in a joint venture with Penton, which will own the remainder. Some 45 to 50 of Mecklermedia's current 185 employees will go with the online venture. Penton has 1,100 employees.
The transaction is subject to certain terms and conditions, including the valid tender of at least a majority of the shares outstanding on a fully diluted basis, and normal regulatory approvals. Any shares not purchased in the tender will be acquired for the same price in cash in a second-step merger.
"We are merging with the most exciting business media company in the world today, Mecklermedia," Penton chief executive Thomas Kemp told a press conference today. "We recognize the value of this company, and we're not going to do anything to screw it up."
"We're on a roll, and it's always a good time to exit. It's better to go on the rise than on the fall," Meckler said of his decision to sell now. He said the company had received four or five buyout offers in the last three years.
"I have a unique opportunity to work with Penton to build an additional business line. I'm not really going anywhere," Meckler added. "Now I'm able to move on and do the things I like to do best, which is strategy."
Penton's Kemp declined to rule out layoffs as a result of the merger but said few are expected. He predicted cost savings, particularly on print and paper expenses on Mecklermedia's magazine.
Mecklermedia was founded in 1971 by Meckler and its products include the Internet World and ISPCON trade shows and conferences in 29 countries, the Internet World weekly magazine, and Boardwatch, a monthly magazine, among other products.
The Mecklermedia acquisition follows Penton's 1997 purchases of A/E/C Systems International, Industrial Shows of America, Independent Exhibitions in the United Kingdom, and its 1998 purchase of Donohue/Meehan Publishing.
Penton was recently spun off from Chicago-based media and electronics company Pittway. It began trading on the New York Stock Exchange on August 10.
Penton said it plans to fund the acquisition by borrowing funds. Donaldson, Lufkin & Jenrette, which initiated the transaction, and its affiliates have committed to provide the financing necessary for Penton to complete the deal by refinancing Penton's existing indebtedness and paying related expenses.
Meckler, who controls approximately 30 percent of the outstanding shares of Mecklermedia common stock, has entered into an agreement with Penton in which he has agreed, among other things, to tender his shares into the offer and to give Penton an option to purchase his shares in the case of a third-party offer for Mecklermedia.
Both companies anticipate the deal will close in November.