Source Interlink Companies Inc. (NASDAQ: SORC) said on Monday that it has agreed to buy Primedia Inc.'s (NYSE:PRM) Enthusiast Media division for $1.2 billion cash.
The transaction will give Source over 70 magazine titles and 90 Web sites, including brands such as Motor Trend, and Automobile magazines.
Source, a provider of print and digital media content, said that the combination will transform its operations to a vertically integrated media, publishing and merchandising distribution company.
Source Interlink has driven consolidation of a â€œfragmented and inefficientâ€ channel for retail and newsstand sales, said Michael Duckworth, the companyâ€™s chairman in a statement.
This acquisition is a first step to leverage what we have built by transforming Source into a fully integrated media company with both print and digital content.
For fiscal year 2006, Primedia had revenues of $524.8 million. Source Interlink estimates that the combined companies generate approximately $2.4 billion in revenue, Source said.
Following the completion of the transaction, Primedia will operate as a division of Source Interlink and will be headed by Steve Parr, Primediaâ€™s current president.
The transaction is expected to close mid-summer.
Shares of Source Interlink were down 67 cents, or 9.85 percent to $6.13 on the Nasdaq Stock Market.