RC2 buys children's book publisher
By Staff -- Playthings, 6/25/2008 9:29:00 AM
OAK BROOK, Ill.—RC2 has signed a definitive purchase agreement this week to acquire the Children’s Publishing Division (“CPD”) of privately held Publications International Ltd. for $163 million in cash.
Based in Lincolnwood, Illinois, CPD’s titles are primarily license based. Its lines include electronic books, story books, Story Reader and Poingo, an electronic stylus-based reading system. CDI's products are sold at toy stores, mass merchants, warehouse clubs and book retailers throughout North America, Europe, Latin America and Asia. The unit had net sales for the year ended on March 31, 2008, of approximately $112 million and operating income in the mid-teens, according to RC2.
"We are truly excited to be announcing the signing of the CPD transaction,” said Curt Stoelting, CEO of RC2. “This transaction is consistent with our strategic plan to complete synergistic acquisitions which strengthen and diversify RC2’s business … The children’s publishing business is a strong strategic fit with our Learning Curve brand and creates an early learning platform which complements both our Mom, Infant and Toddler and [our] Preschool product segments."
"CPD’s products and the team members joining RC2 will enhance our strategy of building consumer loyalty with branded products that encourage repeat purchases because they are fun to own and use,” Stolting added. “The addition of CPD will allow RC2 to provide additional learning solutions to children and their parents.”
RC2 expects to achieve annual integration cost savings ranging from $8 million to $10 million within 24 months of completing the acquisition, the company said. In addition, the asset purchase allows for a tax basis step-up which will provide an estimated annual future tax benefit of $2.5 to $3.0 million.
In order to finance the deal and its ongoing impact, RC2 has signed a new syndicated senior secured credit facility for $325 million led by Bank of Montreal, the lead bank in the company’s existing senior credit facility.
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