M&A

The Board of Directors of Arnoldo Mondadori Editore S.p.A. has today examined and defined – in light of a more favourable evolution than had been previously forecast of both the business and the prices of the main production factors – the upwards revision of the FY 2023 targets previously disclosed to the market.

Income Statement:

• single-digit revenue growth confirmed;
• Adjusted EBITDA expected to rise by high single-digit/low double-digit (compared with the previous single-digit forecast), with margins expected to range between 16% and 17% (from the previous 15%);
• approximately 20% growth of the net result, forecast doubled with respect to the previous estimates (+10%), due to both the operational improvement and the effects of the sale of the equity investment held in il Giornale.

Cash Flow and Net Financial Position:

• ordinary cash flow is expected to range between € 65 and 70 million, showing an increase of up to 15% compared with the 2022 figure (previous estimate: € 60-65 million, +10%);
• the Group’s net financial debt (IFRS 16) is confirmed to come in, at end FY 2023, as 1.0x adjusted EBITDA, down from 1.3x at end 2022.

The Mondadori Group also reports that today the parent company Arnoldo Mondadori Editore S.p.A. signed the contract for the acquisition of an equity investment equal to 51% of the share capital of Star Shop Distribuzione S.r.l. operating in the distribution of third party publishers in the comics channel and in the management of direct and franchised sales outlets in the same segment.

The acquisition would make it possible to replicate the vertically-integrated business model with which the Mondadori Group already operates in the book segment, in the comics segment too.

The acquisition of 51% of the share capital of Star Shop Distribuzione has been defined on the basis of an enterprise value, on a cash free/debt free basis (in relation to 100% of the Company), of € 9 million.
The price, which will be paid in full, in cash, at closing, will be adjusted on the basis of the net financial position and net working capital at the date on which the acquisition is completed.

The execution of the transaction is subject to the issue by the Antitrust Authority, in accordance with Law 287/1990, of a ruling not to start an investigation or to authorise the transaction, which entails no charges or requirements or corrective measures considered relevant for the Mondadori Group or Star Shop Distribuzione.

The agreements defined also envisage the signing of put & call option contracts governing the transfer of the residual 49% share of Star Shop Distribuzione. The options will be available for exercise in two equal tranches respectively starting from the approval of the 2025 financial statements and of the 2028 financial statements, at a price to be defined on the basis of the company’s results during the three-year periods 2023-2025 and 2026-2028.

In FY 2022, Star Shop Distribuzione recorded revenues of € 34.2 million, EBITDA of € 2 million and net profit of € 1.2 million.

The transaction sees Sergio Cavallerin and Matteo Cavallerin – who founded and to date have successfully managed the company – retain management responsibility and continue to hold the role of Executive Directors in the Company.

Arnoldo Mondadori Editore S.p.A. announces to have finalized today the closing of the disposal of its 18.45% equity stake in Società Europea di Edizioni S.p.A. to P.B.F. S.r.l., previously announced on 16 March last.

The sale consideration, to be settled entirely in cash, was set at 2.3 million euro, taking account of the price adjustment mechanism based on the company’s net financial position at the closing date.

The sale has generated a net capital gain of 0.5 million euro in the Mondadori Group income statement.
In financial year 2022, this stakeholding generated a loss of 1.8 million euro in the consolidated financial statements.

The sale is consistent with the Group strategy to focus on the books business and divest non-core assets.

The Mondadori Group announces the conclusion today, through its subsidiary Mondadori Libri S.p.A., of the acquisition of a further 25% stake in A.L.I. S.r.l. – Agenzia Libraria International, operating in the distribution of books.

The transaction – which raises the Mondadori Group stake in A.L.I. to 75%, which will be subject to full consolidation as of 1 January 2023 – takes place in execution of the agreements defined and disclosed last 11 May 2022 upon acquisition of an initial 50% stake, effective earlier than the date originally scheduled for 28 February 2023.

The provisional price, paid entirely in cash, is approximately € 9.5 million and was determined, as already disclosed to the market, on the basis of an average 2021-2022 EBITDA and the positive net financial position (cash) of the scope covered by the transaction, which at 31 December 2022 amounted to € 17.8 million (preliminary figure).

Additionally, the defined agreements give the Mondadori Group the right to acquire the remaining 25% in A.L.I., at a price to be determined on the basis of an average 2023-2024 EBITDA, through put&call options exercisable by 30 July 2025.

The transaction is consistent with the path of vertical integration in the books market, with a view to the gradual strengthening in the promotion and distribution activities of third-party publishers.

The Mondadori Group announces the execution today by the subsidiary Mondadori Media S.p.A. of the contract for the disposal to Reworld Media S.A. – signed last 22 November and disclosed to the market on the same date – of the print and digital publishing operations of the Grazia and Icon brands, as well as the related international licensing network.

 The execution of the transaction took place with the transfer of the business unit heading the operations disposed of to a newly-incorporated company and the concurrent disposal to Reworld Media of 100% of the share capital of the transferee.

The Mondadori Group announces that it has received notification today from the Offices of the Presidency of the Council of Ministers of the resolution not to exercise the special powers under Law Decree 21/2012 regarding the disposal to Reworld Media S.A. of the operations under the Grazia and Icon brands, as disclosed last 22 November.

The measure, which in essence authorizes the disposal of the above operations, triggers the fulfilment of the suspensive condition attached to the sale agreement, which will therefore be fully executed on the closing date.

The completion of the transaction will be promptly disclosed to the market.

The Mondadori Group announces that, on today’s date, the subsidiary Mondadori Media S.p.A. exercised the put option, previously disclosed to the market last 20 October, and, as a result of it, signed the agreement that regulates the disposal to Reworld Media S.A. of the print and digital publishing operations of Grazia and Icon as well as the related international network.

The consideration for the transaction, as previously disclosed, is € 8.5 million, including € 2 million as earn-out conditional on the achievement of certain financial results in 2023 by the operations disposed of. The price – to be paid in cash at the closing date – was defined on the basis of an Enterprise Value of € 11 million (including earn-out), net of the difference between the average net working capital over the last 12 months and the net working capital at the closing date.

In 2021, the above-mentioned activities generated revenue of approximately € 18 million.

Completion of the transaction – subject to the outcome of the assessment procedure under Law Decree 21/2012 by the Offices of the Presidency of the Council of Ministers – will take place through the transfer by Mondadori Media of the business operations to be disposed of to a newly-incorporated company and the subsequent disposal to Reworld Media of 100% of the share capital of the transferee.

In accordance with the provisions of law, the procedure with the trade unions was accomplished.

The Mondadori Group announces that on today’s date, Reworld Media S.A. has granted a put option through which its subsidiary Mondadori Media S.p.A. is entitled with the right to sell its Grazia and Icon business operations.

The perimeter underlying the option includes the print and digital operations of the two brands, as well as the relating international network comprising over 20 geographies with licensed publications.
In 2021, the perimeter recorded revenue of approximately € 18 million.

Under the terms of the put option, the Purchase Price has been set at €8,5 million, of which € 2 million as earn-out subject to the achievement of certain financial results in 2023, and is based on an Enterprise Value of the perimeter equal to € 11 million (including earn-out), net of the difference between the average net working capital of the last 12 months and the net working capital at closing date.

The Mondadori Group, pursuant to the provisions of law, will launch the consultation procedure with the trade unions, following which the option could be exercised.

Following the ongoing assessments, Mondadori Group will promptly disclose to the market any decision made relating to the exercise of the option and any further steps, terms and conditions of the process underlying the transaction.

The deal – the possible completion of which will also be subject to the outcome of the assessment procedure by the Offices of the Presidency of the Council of Ministers referred to in Law Decree 21/2012 – would be in line with the Mondadori Group’s repositioning strategy of increasing focus on the core business of books and on brands with greater potential for multimedia exploitation.

The Mondadori Group announces the completion today of the disposal to Artoni Group S.p.A. and SRH S.r.l. – two of the leading local distributors of daily newspapers and magazines – of 51% of the share capital of Press-di Distribuzione Stampa e Multimedia S.r.l.; the company is wholly owned by Mondadori Media S.p.A. and is active in the national distribution of newspapers and magazines for the Mondadori Group and for over 90 third-party publishers.

The transaction will not envisage changes in the contractual terms and conditions already applied to distribution activities, and is intended to increase efficiency and achieve synergies through a vertical integration process in the sector by involving specialized players; additionally, Righel Anglois will continue to hold his position as CEO.
The transaction continues the path of shortening the distribution chain to protect, digitize and strengthen the “last mile”, with an increasing support to newsstands, which are the most tangible and important interface with readers for publishers of newspapers and magazines.

The disposal of 51% of Press-di, which contributed approximately € 29 million to the Mondadori Group’s consolidated revenue in 2021, envisages a consideration of € 1.5 million; the transaction will produce no material operating, financial or business effects and will have no impact on the Group’s guidance for 2022 as disclosed to the market.

The Mondadori Group announces the completion today, through its subsidiary Mondadori Libri S.p.A., of the acquisition of 51% of Edizioni Star Comics S.r.l., Italy’s leading comic books publisher.
The transaction, which takes place in execution of the agreement signed and disclosed to the market last 6 June, will be effective as of 1 July, the date from which Mondadori will also fully consolidate the company.

As a result of the acquisition – consistent with the strategy of increasing focus on the core business of books – the Mondadori Group gains a leadership position in the domestic comic books segment, with an approximately 30% market share (GfK, in terms of value, June 2022).
Under the agreement, Simone Bovini and Claudia Bovini retain their management positions in Edizioni Star Comics, continuing to serve as Managing Directors.

The price for the acquisition of 51% of the share capital of Edizioni Star Comics – paid fully in cash today – is € 14.28 million, defined on the basis of an Enterprise Value (for 100% of the company) of € 28 million and an estimated net financial position at closing of zero.
The price will be adjusted based on the final net financial position at 30 June 2022.

The transaction, including the impact of the put&call options giving the Mondadori Group the right to increase its stake up to 100% in Edizioni Star Comics, changes the Group’s guidance for 2022 as follows:

• free cash flow is expected to be € 10-15 million versus the previous estimate of € 40-45 million;
• the Adjusted NFP/EBITDA ratio (IFRS16) stands at a level below 1.3x versus the previous forecast (below 1.1x).

The Mondadori Group announces that it has signed an agreement today on the acquisition of a 51% stake in Edizioni Star Comics S.r.l., Italy’s leading comic books publisher, specialized in the publication on the domestic market of the major international productions including, in particular, Japanese manga.

The acquisition, fully consistent with the repeatedly-announced strategy to strengthen the core business of books, allows the Mondadori Group to secure a leadership position in the domestic comic books segment, the most thriving area in the publishing industry, boasting a 175% growth over the three-year period 2019-2021 and 30% in the first 4 months of 2022 (figures in terms of value, source AIE Research Office on Nielsen Bookscan data).

“Over the past few years, the Comics segment has become an important lever of development for the entire books chain, thanks also to the high innovation rate of the publishing offer and the extraordinary ability it has to attract new readers: Star Comics stands as the undisputed leader in this segment” – said Antonio Porro, CEO of the Mondadori Group.
“The exchange of expertise between our group and a publisher such as Star Comics, whose people have been able to build a recognized and consolidated leadership over time, enhanced by a strong relationship with its audience, will be interesting and fruitful”, ended Porro.

The activities of Edizioni Star Comics can find further opportunities for growth within the Mondadori Group, thanks to the synergies generated by the deal, including, in particular, access to the most extensive network of bookstores in Italy, where Mondadori Retail is developing spaces specifically dedicated to the comics product.

The acquisition of a 51% stake in the share capital of Edizioni Star Comics was defined on the basis of an Enterprise Value (for 100% of the company) of € 28 million: the price, which will be paid in full in cash at closing, will be subject to final adjustment based on the net financial position at the closing date.

The defined agreements also envisage the underwriting of call option contracts, which give the Mondadori Group the right to acquire the remaining 49% stake in Edizioni Star Comics, exercisable in two equal tranches starting from the approval of the 2024 and 2027 financial statements, respectively, at a price to be set on the basis of the average EBITDA of the relevant previous three years. Should Mondadori fail to exercise the call options, the agreements govern put options in favour of the sellers exercisable under the same price conditions.

In 2021, Edizioni Star Comics recorded strong growth in results versus the prior year: revenue of        € 21.6 million, EBITDA of € 7.2 million, net profit of € 5.1 million and a positive net financial position (cash) of € 4,3 million.

Under the deal, Simone Bovini and Claudia Bovini – who founded and have so far successfully managed Edizioni Star Comics, bringing it to its leading role in the Italian comic books market – will retain management responsibilities and continue to serve as managing directors of the company.
The scope of the transaction also includes the acquisition of 100% of Grafiche Bovini S.r.l., a company controlled by the same family of founders, specialized in printing activities exclusively of products published by Edizioni Star Comics.

The transaction is expected to close by 30 June 2022, and is conditional, inter alia, upon the spin-off of the property component as well as the consent of the Japanese and Korean licensors who own the rights to some of the company’s publications.
Any impact on guidance for the current year, which has already been disclosed to the market, will be announced on completion of the transaction.