Wednesday, March 6, 2013

Time Warner issues statement saying it will spin out Time Inc. into an independent, publicly traded company

Below is the statement issued late this afternoon by Time Warner stating it will spin out its magazine division into a separate company. I would be cautious about this unless Meredith follows up with a confirmation that it has ended talks with Time Warner (since confirmed, see below). I've personally been involved with M&A talks that broke down... just before they were completed – though never with so public a statement as this one.

Time Warner Inc. Announces Plan to Separate Time Inc.

NEW YORK--Time Warner Inc. (NYSE:TWX) today announced that its Board of Directors has authorized management to proceed with plans for the complete legal and structural separation of Time Inc. from Time Warner. Following the proposed transaction, Time Inc. would be an independent, publicly traded company. Time Warner aims to complete the proposed transaction by the end of the calendar year.

Time Warner Chairman and Chief Executive Officer Jeff Bewkes said: “After a thorough review of options, we believe that a separation will better position both Time Warner and Time Inc. A complete spin-off of Time Inc. provides strategic clarity for Time Warner Inc., enabling us to focus entirely on our television networks and film and TV production businesses, and improves our growth profile. Time Inc. will also benefit from the flexibility and focus of being a stand-alone public company and will now be able to attract a more natural stockholder base. As we saw with the prior spin-offs of Time Warner Cable and AOL, we expect the separation will create additional value for our stockholders.”

Time Inc. CEO Laura Lang has advised Time Warner that she will stay on through this process and until after a successor has been identified. “Laura indicated to me that we should find a different kind of CEO for this new public company, and I respect her decision,” Bewkes said. “She has been a great partner who has given Time Inc. forward momentum to make this transition possible, and I look forward to working with her to select the right leader to head the company as an independent entity.”

After the proposed separation is completed, Time Inc. will continue its mission as the leading multi-platform publishing and branded content company, reaching nearly half of U.S. adults each month and millions of consumers around the world.

The proposed transaction will be structured as tax-free to Time Warner stockholders. The transaction is contingent on the satisfaction of a number of conditions, including completion of the review process by the Securities and Exchange Commission of required filings under applicable securities regulations and the final approval of transaction terms by Time Warner’s Board of Directors.
Meredith issued their own statement this afternoon stating that "we respect Time Warner's decision and certainly remain open to continuing a dialogue on how our companies might work together on future opportunities."

"Going forward, Meredith will continue to enhance shareholder value through ongoing execution of our successful Total Shareholder Return strategy and building on our company's strong momentum. We are in an excellent financial position given the significant free cash flow our businesses generate and our low debt level. We will continue to focus on initiatives designed to maximize the value of our attractive national and local media and marketing services assets, including strategic acquisitions," Meredith Chairman and Chief Executive Officer Stephen M. Lacy said.