Stocks opened the week on a mixed note. The Dow Jones Industrial Average (DJINDICES: ^DJI) posted a small gain, while the S&P 500 (SNPINDEX: ^GSPC) lost a point.
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The price of crude oil retreated after hitting a two-year high last week, dragging down energy shares with it. The SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT: XOP) fell 2.4%.
Acquisition deals made news today. Media industry consolidation continued with Meredith Corporation (NYSE: MDP) announcing it was buying Time, Inc. (NYSE: TIME) for $2.8 billion, and Barracuda Networks (NYSE: CUDA) soared on news it is being bought by a private equity firm.
Meredith buys Time to create magazine giant
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Media conglomerate Meredith Corporation announced it was acquiring magazine publisher Time in a $2.8 billion all-cash deal, sending shares of Time and Meredith up 9.5% and 10.7%, respectively. The previously rumored deal values Time at $18.50 per share, which is a 46% premium over the price of the stock the day before rumors of the deal leaked earlier this month.
The acquisition will be financed by $3.55 billion in debt and $650 million in preferred equity from the politically conservative billionaire Koch brothers. The press release from Meredith made clear that Koch Equity Development will not have a seat on the board and will not have influence on Meredith's editorial or managerial operations. The combination adds Time magazine to Meredith's Better Homes & Gardens, Parents, and Shape titles, and will result in a magazine business with readership of 135 million and paid circulation of 60 million.
"We are adding the rich content-creation capabilities of some of the media industry's strongest national brands to a powerful local television business that is generating record earnings, offering advertisers and marketers unparalleled reach to American adults," said Meredith Chairman and CEO Stephen M. Lacy in the press release. "We are also creating a powerful digital media business with 170 million monthly unique visitors in the U.S. and over 10 billion annual video views, enhancing Meredith's leadership position in reaching Millennials."
The market clearly regards the deal as a win for both companies. Time has been struggling with declining advertising and circulation revenue, but Meredith was able to pick up the venerable brand for 0.9 times 2016 sales, far less than Meredith's own valuation of of 1.8 times revenue.
Barracuda Networks sells out to private equity
Shares of cybersecurity firm Barracuda Networks soared 16.5% after the company announced it has agreed to be acquired by private equity firm Thoma Bravo in an all-cash deal worth $1.6 billion. Barracuda shareholders will receive $27.55 per share, a 22.5% premium to the 10-day average stock price prior to Nov. 27.
Thoma Bravo specializes in acquiring software firms, and has worked in the area of cybersecurity before, having bought Symantec's website security solutions earlier this month, taking a minority position in McAfee in April, and recently spinning off SailPoint Technology Holdings through an IPO.
"We believe the proposed transaction offers an opportunity for us to accelerate our growth with our industry-leading security platform that's purpose-built for highly distributed, diverse cloud and hybrid environments," Barracuda CEO BJ Jenkins said in the press release. "We will continue Barracuda's tradition of delivering easy-to-use, full-featured solutions that can be deployed in the way that makes sense for our customers."
Barracuda is coming off a disappointing quarter and its shares have basically languished since going public in late 2013. With the deal approved by both boards and the stock trading around the buyout price at a 52-week high, Barracuda investors really have no reason to hang on to shares any longer.
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