QRT.L Regulatory News (QRT)

28 Aug 2007 07:15

Quarto Group Inc28 August 2007 Tuesday 28 August 2007 QUARTO GROUP PLC Quarto in $12.5 million Acquisition of US Book Publisher Quarto, the London-based and listed international book publisher, announces theacquisition of MBI Publishing Company LLC ("MBI"), a publisher and distributorof special interest titles, based in Minneapolis, USA, from MBI PublishingHoldings LLC, a private equity vendor. Laurence F Orbach, Quarto's Chairman and Chief Executive Officer, said: "MBI isa significant acquisition, in line with our strategy of building strength inpublishing books for audiences of enthusiasts and professionals, and leveragingour back office infrastructure to achieve improvements in overall financialperformance. It fits excellently with our various Quayside imprints and we lookforward to building upon the strength of the enlarged group. We expect to moverapidly to integrate MBI's back office activities with Quayside, a corecomponent of Quarto's publishing segment, which is located in Minneapolis." "MBI is the leading US publisher of books for transport enthusiasts(automobiles, motorcycles, trucks, tractors, aviation, etc), and the major USdistributor for a number of overseas, predominantly UK-based, publishers ofspecialist transport titles; it also publishes a respected range of militaryhistory and militaria titles, under the Zenith imprint, and a more general listof regional, outdoor activity, sport, and special interest titles under theVoyageur Press imprint." "Today's purchase is an excellent way to further the growth of Quarto's QuaysidePublishing Group, which is on track to be the publisher and distributor ofchoice for books for enthusiasts across a wide range of subject categories." MBI will become part of the Quayside Group, and be managed by its CEO, Ken Fund."Motorbooks has an extremely well respected name in the transportation category,and is one of the best-defined brands in publishing," says Ken Fund. "I amthrilled with the acquisition, and the opportunity to lead a company with suchan established reputation and deliberate publishing strategy. In addition to itssuccess in the traditional book trade, MBI has generated significant revenuesfrom the highly important automotive, farm, and hobby channels, as Quayside hasdone within the home improvement, outdoor, and craft channels. Both companieshave long set the standard satisfying enthusiasts' thirst for detail." MBI and its three imprints will be integrated into the Quayside PublishingGroup. MBI ranks as one of the 20 largest independent consumer publishers and isthe largest with a pure play focus on the enthusiast. In 2005, MBI celebratedits 40th anniversary, and today they offer more than 8,000 book and calendartitles across a wide range of subjects including cars, motorsports, motorcycles,tractors, railroads, racing, travel, nature, military history, aviation, countryliving, Americana and calendars. MBI publishes more than 200 books per yearunder three core imprints: Motor Books, Voyageur Press and Zenith Press. Recentbestsellers include Muscle: America's Legendary Performance Cars, How to RepairYour Car, Ultimate Horse Barns, and Iwo Jima: Portrait of a Battle. Distribution services are an important component of MBI's business (MBIDistribution Services). In addition to the distribution of their own titles MBIdistributes for more than two dozen specialist publishers. On averageDistribution's client publishers have been distributed by the company for morethan a decade. In addition to its exclusive distribution relationships, MBItakes advantage of its market position to wholesale books of other publishersinto specialty channels, and particularly into Tractor Supply Co. (TSC), forwhich MBI serves as the category manager. "We look forward to building on therelationship MBI has forged with TSC and being their partner for a long time tocome," says Ken Fund. Tractor Supply Co. is the company's primary wholesaleaccount. Quayside Publishing Group (formed in 2004 upon Rockport Publishers' acquisitionof Creative Publishing international, which is based in Minneapolis) encompassesfive imprints: Creative Publishing international, Fair Winds Press, QuarryBooks, Quiver, and Rockport Publishers. Quayside currently publishes over 250books a year in the graphic design, enthusiast and lifestyle categories. Recentbestsellers include The 150 Healthiest Foods on Earth, Black & Decker(R) TheComplete Photo Guide to Home Repair, Universal Principles of Design, SingerSimple Sewing Guide and The Art of Fly Tying. MBI's warehouse operation will continue to be located in Osceola, WI. MBI's CEO,Randy Roland, will leave the company to pursue new interests. The consideration for the purchase of MBI is $12.5 million, payable in cash. Asof December 31, 2006, the value of the gross assets being acquired was $41.8m.For the year ended December 31, 2006, the business reported net revenues of$35.2m and an operating profit of $1.9 million, before amortization ofintangibles of $1.3m, and interest costs of $2.7m. The acquisition is beingfinanced using Quarto's existing committed facilities, which total $165 million,and includes the assumption of approximately $22.2 million of debt. "We expect the operating profit contribution from MBI to be in excess of ourpublishing division target of 10% of sales, and to enhance earnings on a fullyear basis. The acquisition is a further step in achieving Quarto's objective tobecome the publisher and distributor of choice in the area of lifestylepublishing. We continue to investigate further acquisition opportunities"commented Michael Mousley, Quarto's Chief Financial Officer. Enquiries: The Quarto Group, Inc.Laurence Orbach (Chairman & CEO) 020-7700 9003Mick Mousley (Finance Director) 020-7700 9004 Bankside Consultants LimitedCharles Ponsonby 020-7367 8851 This information is provided by RNS The company news service from the London Stock Exchange