Eastern European Markets
January 19, 2005
(edited version)


Sanoma Magazines, a division of the SanomaWSOY Group, has entered into an agreement to acquire Independent Media Holding B.V., its subsidiaries and its associated companies (IMH Group). Independent Media consists of six main operating companies in Russia and Ukraine. The enterprise value amounts to some EUR 142 million. The acquisition is subject to the approval of both the Russian and Ukrainian competition authorities as well as satisfactory agreements with certain licensors regarding the continuation of the respective license agreements.

The transaction will be financed using existing short-term credit facilities. The closing of the acquisition is expected during the second quarter of 2005. The transaction is expected to have a positive effect on SanomaWSOY’s EPS already in 2005, depending on the purchase price allocation and the final amount of amortisation on intangible assets.

Independent Media, through its subsidiaries and joint ventures in Russia and Ukraine, publishes 31 consumer and business magazines as well as 3 newspapers. Independent Media’s portfolio includes such successful, internationally known magazine brands as Cosmopolitan, Good Housekeeping, FHM, Men’s Health, as well as Russian newspapers Moscow Times and Vedomosti, among others.

"With Independent Media, we will become the leading consumer magazine publisher in Russia and obtain a position in Ukraine. With its 52 million households, Russia offers great growth opportunities", says Hannu Syrjänen, President & COO of SanomaWSOY.

"It has been our long-term plan to enter the Russian market, and we have been looking for a good acquisition target. Independent Media is the market leader in Russia and is an excellent fit forus. The company has a good portfolio of known brands. We share a similar view about the magazine business, the importance of constantly developing customer relationships and a quality product portfolio", Syrjänen emphasizes.

"This is also a significant step for SanomaWSOY, since it is our opening to Russia and Ukraine. Expanding our magazine operations to these countries is a logical continuation of our growth strategy. This also widens SanomaWSOY’s opportunities to enter the Russian press distribution market", he continues.

"The Russian market is very interesting to us, because both advertising spending and the readers’ market are growing fast. Independent Media is well positioned in the market: through this acquisition we will become the leading publisher in relevant segments", comments Eija Ailasmaa, President of Sanoma Magazines.

"For our future, Independent Media is a springboard for further expansion not only in its present markets but also in new regions and markets in CIS (Commonwealth of Independent States) countries", Ailasmaa continues.

"I'm very confident about the future of Independent Media within Sanoma Magazines, comments Derk Sauer, CEO of Independent Media. "Being part of Sanoma Magazines will make it possible for Independent Media to enter new markets and secure long-term growth. This is a new and exciting chapter in the our history and I'm proud to lead the company into its new future, he continues.

Independent Media estimated net sales including the sales of 50/50 joint ventures in 2004 amounted to about EUR 70 million, of which Sanoma Magazines’ pro forma consolidated share is some EUR 47 million. The corresponding pro forma consolidated EBITA in 2004, including the share of associated companies, is EUR 10 million. Independent Media’s average growth of net sales during the last three years has been 25%.

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