PARIS (Bloomberg) -- The French publishing giant that owns Car and Driver, Road & Track, and 100 other magazines said Monday it received a binding 651-million euro ($886 million) offer from Hearst Corp. for its international magazine business.
Paris-based Lagardere SCA said in a statement the deal would cover 102 titles in 15 countries. Car and Driver, a longtime title geared toward automotive enthusiasts, is headquartered near Detroit in Ann Arbor, Mich. Road & Track is headquartered in Newport Beach, Calif.
After a drop in advertising during the economic downturn in 2009, “we concluded that outside of France we lacked the critical scale to be able to resist such a recession,” Lagardere CEO Arnaud Lagardere said during a conference call.
Lagardere expects the deal with Hearst to be completed by the end of the third quarter. The company and Hearst began exclusive talks in December and the negotiation period will now be extended, according to the statement.
Lagardere wants to focus on its main book and domestic-press businesses, while also pushing into sports marketing. It has begun preparations for an initial public offering of its 20 percent stake in pay-TV operator Canal Plus France. He also wants to sell a 7.5 percent stake in European Aeronautic Defence & Space Co., the Airbus SAS parent.
The units being sold had revenue of 774 million euros ($1.06 billion) last year and operating profit, after minorities, of 37.7 million euros, Lagardere said.
The countries covered by the Hearst offer are the U.S., Russia, Ukraine, Italy, Spain, the U.K., China, Japan, the Netherlands, the Czech Republic, Hong Kong, Mexico, Taiwan, Canada and Germany.
CEO Lagardere said on the call that the company will use the proceeds from the sale to pay down some debt. It may then look for acquisitions in the sports, retail and digital fields.
Industry observers see Hearst gaining considerable cost savings and added power as a marketer to women with the addition of Elle and Woman's Day. Hearst publishes Cosmopolitan, Harper's Bazaar, Marie Claire and Good Housekeeping.
"They're great complements to the titles they've already got," said Roberta Garfinkle, director of print strategy at media buying agency TargetCast. She added that the men's titles, which include Car and Driver, Road & Track and Cycle World, will give Hearst "a new avenue to explore."
Currently, the publisher has two men's titles, Esquire and Popular Mechanics.
"It gives Hearst the ability to sell a bigger corporate package," she said.
Crain's New York Business contributed to this report.