Australian Group Buying American Consolidated Media For $80 Million

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By: Mark Fitzgerald

Macquarie Media Group, an Australian fund that invests in media, is buying American Consolidated Media (ACM), the Texas community newspaper group founded by former Dallas Morning News President and General Manager Jeremy L. Halbreich, for $80 million, it was announced Wednesday.

Macquarie is purchasing the 40-paper chain from Halyard Capital, which first invested in ACM in July 2004 to fund the acquisition of Valley Media, a publisher of shoppers and community papers in the Rio Grande Valley.

Halbreich said in an interview that he will be staying on at the Dallas-based newspaper company he launched in 1998.

“Part of the attraction from Macquarie’s point of view was our management group, so we’re all staying on with the goal of expanding the platform we already have in the local community newspaper segment,” he said.

Macquarie, he added, wants to expand ACM “not only in Texas and the Southwest, but also beyond.”

For its part, Macquarie said the acquisition, its first in the U.S., “provides access to the stable cash flows generated from local community newspapers in the U.S.”

In its announcement in Australia, Macquarie said ACM had revenues through November of 2006 of A$35.6 million (US$28.22 million), with A$11.5 million (US$9.12 million) cash flow, and EBITDA (earnings before interest, taxes, deductions and amortization) of A$8.9 million (US$7.05 million). Its 2006 cash flow margin was 32.3%, and its EBITDA margin was 25.1%. For the full year of 2005, ACM had revenues of A$32.3 million (US$25.6 million) and an EBITDA of A$8.7 million (US$6.9 million) and an EBITDA margin of 27.0%.

Macquarie is publicly traded on the Australian Stock Exchange. The company said it is “in a number of discussions” with U.S. newspaper chains, including “exclusive negotiations” about further acquisitions.

Halyard said the sale concluded its “fourth successful investment in the newspaper business.” Halyard has also invested in ImpreMedia, the big Spanish-language chain; Herald Media; and American Community Newspapers.

“Halyard was attracted to ACM community papers’ strong franchise values in high-growth communities where there are few local media competitors. In locations where there are competitive publications, ACM generally owns the dominant paper,” Christopher Ruth, a partner at Halyard Capital, said in a statement. “Most of its publications are mature brands with a strong, loyal readership and long relationships with local advertisers. In addition, ACM’s publications are geographically clustered, providing operating leverage and cost synergies in the areas of distribution, printing, newsprint and administration. All these factors increased ACM’s attractiveness as a media investment.”

Dirks, Van Essen & Murray, the Santa Fe, N.M.-based newspaper brokerage, acted financial advisor to Halyard. Paul, Weiss, Rifkind, Wharton & Garrison LLP as well as Akin Gump Strauss Hauer & Feld LLP served as legal advisors to the seller.

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