Forbes sale nears as Spice Group, Fosun said to plan bids

The sale follows years of dwindling profits as the rise of digital media ate into advertising at the magazine

Forbes Media LLC is drawing interest from acquirers including China's Fosun International Ltd and Singapore's Spice Global Investments Pvt, with final offers for the magazine publisher due on Monday, people with knowledge of the matter said.

Germany's Axel Springer SE, which publishes the Russian edition of Forbes magazine, is also interested in the business, two people said, asking not to be named discussing private information. Forbes, which is working with Deutsche Bank AG on the sale, is seeking as much as $400 million, people with knowledge of the matter said in November.

The sale of Forbes, famous for tracking the wealth of billionaires across the globe, follows years of dwindling profits as the rise of digital media ate into advertising at the magazine. During the sale process, Forbes executives have emphasised the brand as a masthead for events and conferences as well as real-estate developments, a way of extending beyond its roots in traditional media, two people said.

"Forbes used to just be a magazine, now it's a worldwide business brand," Ken Doctor, a media analyst with Outsell Inc, said in an interview. "How many people in their twenties and thirties are in emerging business markets - Asia, Africa, Latin America? That's my sense of the great growth potential of the Forbes brand."

Spice Global, whose businesses range from finance to health care and entertainment, is currently seeking partners from West Asia, the US and Singapore as it prepares its bid for Forbes, said two of the people. The company will keep a majority stake in Forbes even if it bids with a partner and may offer the Forbes family the opportunity to buy back shares in the company, one of the people said.

Earnings target
Spokesmen for Fosun, Spice Global, Axel Springer, Forbes and Deutsche Bank declined to comment.

The $400 million Forbes is seeking isn't justified by the company's earnings alone, Doctor said. Magazines typically sell for 5 or 6 times earnings before interest, taxes, depreciation and amortisation, and at a $400 million valuation Forbes would have to have at least $67 million in Ebitda based on those multiples, Doctor said.

Forbes projects Ebitda of $33.4 million for 2014, Doctor said, citing sales documents he obtained. Doctor has published the contents of those documents on the website of Harvard University's Nieman Journalism Lab.

Property deals
While this year's earnings forecast corresponds to a value of close to $200 million, Forbes - which was founded in 1917 - carries influence that could merit a higher price, Doctor said. In September, the company agreed to let a Philippines developer use the name "Forbes Media Tower" for a Manila office building and said it was working on at least two similar ventures.

"Its media value is very strong, so for some buyers a higher price may not make a difference," Doctor said.

During talks with Forbes, the acquirers have raised concerns about a lawsuit filed against the company by Saudi Prince Alwaleed bin Talal, three people said. Alwaleed sued last April after Forbes magazine lowered its estimate of his wealth for its annual rich list.

Spice Global has asked the Forbes family to bear costs related to the suit, one of the people said. Damages in defamation cases in the U.K. are capped at around 275,000 pounds ($451,000), said Gideon Benaim, a media litigator at Michael Simkins LLP. While that amount would be awarded only in the most serious cases, it doesn't include legal fees which can be higher than the damage award, Benaim said.

Mia Carbonell, a spokeswoman for Forbes, declined to comment on the lawsuit. Bloomberg LP, which publishes its own ranking of the world's billionaires, competes with Forbes.

Alwaleed's net worth has risen by 26 percent, or $6.6 billion, since September, according to the Bloomberg Billionaires Index. Shares in Kingdom Holding Co., 95 percent-controlled by Alwaleed, have risen 52 percent since its 52-week low on Sept. 5, against a 7 percent increase for the Standard & Poor's 500 Index.

Forbes Russia
Axel Springer has published a Russian edition of Forbes since 2004, building it into one of the country's leading business publications. The Berlin-based publisher also introduced a licensed edition of Forbes for the Polish market that year.

Fosun International, the Shanghai-based conglomerate controlled by billionaire Guo Guangchang, has been on a buying spree. It paid 1 billion euros ($1.36 billion) for a controlling stake in the insurance unit of Portugal's Caixa Geral de Depositos SA in January and bought the 2.2 million-square-foot (204,000-square-meter) 1 Chase Manhattan Plaza tower for $725 million in October.

Guo, with a fortune of $4.5 billion according to the Bloomberg Billionaires Index, said in a December interview that he planned to expand the company's U.S. commercial real estate investments. Fosun is a licensing partner of Forbes Media in China, according to Forbes' website.

The three companies' interest in Forbes was earlier reported by the Wall Street Journal.