Quarto Publishing Group USA has acquired US-based independent trade publisher becker&mayer from publishing group The McEvoy Group for an initial $9.8m (£7.51m).
becker&mayer publishes adult non-fiction titles and children's books and the deal will increase Quarto’s children’s publishing revenues by close to 30%. The acquisition also means that Quarto’s US revenue will account for around 45% of total group revenues.
The assets of becker&mayer’s book publishing group and its SmartLab book-plus and toy business will become Quarto’s fifth US creative hub, based in Bellevue, Washington, alongside its current publishing operations in Minneapolis, the North Shore of Boston, Southern California and New York City.
The SmartLab toy business will be re-engineered to include an emphasis on producing book-plus products that "maximise the reach of Quarto’s sales channels worldwide," the company said.
In the year ending 31st December 2015, becker&mayer reported revenues of $19.4m (£14.9m), earnings before interest tax, amortisation and depreciation (EBITDA) of $0.3m and a net loss before tax of $1.5m that included amortisation and depreciation of $1.8m. The EBITDA of the book publishing group business was $1.4m whilst the SmartLab business record a loss before interest tax, amortisation and depreciation of $1.1m. Gross assets were $25m.
Quarto is paying a consideration of $9.8m for the company, together with a working capital adjustment payment capped at $1m and further deferred contingent consideration of up to $1.25m, which is dependent on the profitability of its toy company SmartLab’s business in 2018 and 2019. An initial $2.3m is payable in cash and Quarto has issued $7.5m in non-interest bearing promissory loan notes to McEvoy Group. The loan notes are repayable in three equal instalments of $2.5m each on 1st January 2017, 8th August 2017 and 8th August 2018.
The working capital adjustment payment of up to $1m is payable in further cash payments of up to $0.5m each, payable on 31st July 2017 and 31st July 2018.
Marcus Leaver, chief executive of The Quarto Group, said: "We have a close working relationship with becker&mayer and we admire its people, creativity and specialist knowledge. We approached the company because we have long felt that it would make a good cultural and strategic fit.
"We are delighted that McEvoy has agreed to sell the business to us as it will be a new and exciting addition to Quarto’s portfolio in the USA. We will leverage its unique publishing assets across the world through our global operational, sales and marketing platform, enhancing value for shareholders within the first full year.”
Jack Jensen, president of The McEvoy Group, said: "becker&mayer has been a cherished McEvoy Group asset over the past 11 years. As we looked to the future, we became convinced that the extensive customer base and global market reach of The Quarto Group was perfectly positioned to help becker&mayer reach the next level of growth. We are pleased that the accomplished becker&mayer team will be an important part of The Quarto Group’s future".