Summary:

Meredith (NYSE: MDP) Corporation, the publisher of women’s magazines like Better Homes & Gardens and Ladies’ Home Journal, is the new owner…

Allrecipes app
photo: Allrecipes

Meredith (NYSE: MDP) Corporation, the publisher of women’s magazines like Better Homes & Gardens and Ladies’ Home Journal, is the new owner of the world’s largest food website, Allrecipes.com, which it will acquire from the Reader’s Digest Association in a $175 million transaction that will close later this quarter.

Allrecipes.com has about 25 million monthly unique visitors. According to Meredith’s press release, the acquisition “more than doubles the audience of the Meredith Women’s Network,” which includes its magazines’ websites and Recipe.com, “to nearly 40 million unduplicated unique monthly visitors,” and “nearly doubles annual digital revenues for the Meredith Women’s Network.” (Meredith does not release annual digital revenue figures.)

Reader’s Digest bought Allrecipes for around $66 million in 2006 and has been shopping it around since last year. Rumored bidders included Random House, Amazon (NSDQ: AMZN) and AOL (NYSE: AOL), according to the NY Post.

Meredith recently acquired Every Day with Rachael Ray magazine and its digital assets, Family Fun magazine and its digital assets and EatingWell.

Full release on page 2.

MEREDITH SIGNIFICANTLY INCREASES ITS DIGITAL SCALE WITH ACQUISITION OF

ALLRECIPES.COM, WORLD’S TOP FOOD WEBSITE, FROM READER’S DIGEST ASSOCIATION

Doubles Reach of Meredith Women’s Network; Supports Total Shareholder Return Strategy

DES MOINES, IA (January 24, 2012) – Meredith Corporation (NYSE:MDP; http://www.meredith.com) and The Reader’s Digest Association, Inc. announced today that Meredith, the leading media and marketing company serving American women, has agreed to purchase Allrecipes.com, the world’s No. 1 digital food site.
“The acquisition of Allrecipes.com, the market leader in the digital food space, significantly enhances our leading consumer and advertiser proposition,” said Meredith Chairman and CEO Steve Lacy. “It more than doubles the scale of the Meredith Women’s Digital Network, and is expected to drive incremental revenue and profit growth, adding to our already strong free cash flow over time.”
The acquisition of a digital brand of scale aligns well with Meredith’s Total Shareholder Return (TSR) financial strategy, which was announced on October 25, 2011. The TSR strategy includes (1) An increase in its annual stock dividend by 50 percent to $1.53 per share; (2) A new $100 million share repurchase authorization; and (3) Strategic investments to drive incremental revenue and profit growth.
The transaction, valued at $175 million, is expected to close later this quarter. Meredith plans to invest in Allrecipes.com to optimize the site for today’s growing online and mobile audiences. This investment spending, along with normal business seasonality, is expected to make the acquisition slightly dilutive – approximately $0.10 per share, or less than 4 percent – to Meredith’s fiscal 2012 full year financial performance. Meredith expects the acquisition will be modestly accretive to earnings per share and free cash flow in fiscal 2013.
The addition of Allrecipes.com fits with Meredith’s previously stated strategic acquisition criteria: (1) National media brands that provide access to new audiences and advertising categories; and (2) Digital platforms that significantly increase scale. Specifically, the addition of Allrecipes.com to Meredith:

• Nearly doubles annual digital revenues for the Meredith Women’s Network.

• Gives Meredith the world’s No. 1 food website to pair with its expanding multi-platform food portfolio, enabling Meredith to offer advertisers access to more than 100 million unduplicated American women.

• More than doubles the audience of the Meredith Women’s Network to nearly 40 million unduplicated monthly unique visitors, making it the No. 1 premium owned and operated website in the important Women’s Lifestyle Category, according to the most recent comScore data.

• Provides Meredith access to a large and vibrant audience to market other products to, including print and tablet magazine subscriptions, as well as drive other E-Commerce opportunities.

• Enables Meredith to apply Allrecipes.com’s proprietary Search Engine Optimization (SEO) expertise across Meredith’s digital platforms, which will improve performance, and reduce Search Engine Marketing (SEM) spending.

• Introduces Meredith brands to new audiences, as Allrecipes.com has 17 sites in 22 countries.

“The acquisition of Allrecipes.com significantly enhances our digital platform and reinforces our leadership position in the food category,” said Meredith National Media Group President Tom Harty. “It increases our relevance with new, younger audiences, and offers advertisers an unmatched ability to now connect with an audience of more than 100 million consumers. We are excited to add Allrecipes.com, the world’s No. 1 food website, to our strong portfolio of digital media brands.”
Allrecipes.com currently has a database of over 500,000 recipes. Its U.S. audience is 70 percent female with a mean household income of $73,000, and it reaches nine out of 10 primary grocery decision makers. Allrecipes.com mobile apps have been downloaded by over 11 million consumers, and they are the No. 1 download on Android, iPhone, and iPad recipe applications. It is also the top food recipe channel on YouTube.
“Allrecipes.com is a dynamic, growing business and our sale process generated significant excitement,” said Robert Guth, Reader’s Digest Association president and CEO. “We are very pleased to have reached agreement with Meredith. We have worked well with them on a past transaction, so we know they will be a great home for this business and the team. For RDA, this is a significant step forward in our commitment to focus our resources on our core businesses, such as the Reader’s Digest brand.”
Added Lisa Sharples, President of Allrecipes.com, “Meredith is the perfect home for Allrecipes.com. Meredith’s laser focus on women, existing strength in food, strong relationship with advertisers and proven consumer marketing expertise are very attractive. Together, I’m confident we can grow the Allrecipes.com brand as well as the Meredith Women’s Network across digital, mobile and social media platforms.”
The acquisition of Allrecipes.com adds to actions Meredith has taken in the last year to strengthen its position as the leader in the digital and food content marketplace. These include the:

• Acquisition of Every Day with Rachael Ray magazine and its related digital media assets;
• Acquisition of FamilyFun magazine and its related digital applications;
• Acquisition of EatingWell, a multi-channel food brand focused on healthy eating and wellness;
• Launch of Recipe.com, a multi-channel food brand that pairs recipes with digital coupons and savings that is already attracting 2 million monthly unique visitors
• Expansion of food and lifestyle content in its leading portfolio of brands across tablet products including the iPad, NOOKColor, Kindle Fire, and Samsung Galaxy.
• Introduction of 12 new apps resulting in more than 3 million downloads, including BHG.com’s highly successful Must Have Recipes; and
• Creation of six new Special Interest Media titles, bringing the total in the food space to nearly 40.

“We are constantly looking for strategic acquisitions and investment opportunities to expand our reach and increase shareholder value,” said Meredith Chief Development Officer John Zieser.
BDT & Company served as financial advisor to Meredith, and McDermott, Will & Emery served as its legal advisors. Morgan Stanley acted as lead financial advisor to Reader’s Digest. Evercore Partners acted as financial advisor to Reader’s Digest. Weil, Gotshal and Manges acted as legal advisor to Reader’s Digest.

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