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Suitors are lining up to buy Simon & Schuster amid market troubles



Even as the market crumbles on coronavirus fears, the sales process for Simon & Schuster is chugging along.

At least 20 inbound inquiries materialized since ViacomCBS CEO Robert Bakish revealed on March 4 that he wants to sell its book publishing subsidiary, a source close to the process said before noting that many of them will not likely materialize into bidders.

“Only a small number of [potential bidders] are expected to be competitive,” the source added.

ViacomCBS has tapped Aryeh Bourkoff’s Lion Tree as the investment banker to handle the sale of venerable book publisher Simon & Schuster.

S&S wants at least $1.2 billion, while some think a spirited auction could push the price tag as high as $1.5 billion.

“We estimate the transaction value of Simon & Schuster at approximately $1.5 billion, based on approximately $150 million in estimated 2020 EBITDA and a 10x valuation multiple,” said Guggenheim Securities.

“Simon & Schuster is a prime asset with one of the great catalogs in the history of the book industry, so there is going to be real interest from strategic buyers and potentially from financial buyers,” added David Steinberger, CEO of Arcadia Publishing, and former CEO of the Perseus Books Group.

Of course, the coronavirus crisis that has raised fears of an economic slowdown could also dampen the price.

“I’m a little skeptical of that [$1.5 billion price] especially given what is going on the market lately,” said David Novosel, a senior analyst at Gimme Credit, who is expecting it to sell closer to the 8 times EBITDA, which was $147 million for S&S in 2019.

“It’s not been a great performer, but it provided a pretty steady cash flow,” conceded Novosel, who noted its revenues only increased modestly from $778 million in 2014 to $814 million last year.

S&S counts a backlist that includes literary titans Ernest Hemingway and F. Scott Fitzgerald, as well as more recent best-seller novelists from the late Mary Higgins Clark and Stephen King to non-fiction bestsellers including Doris Kearns Goodwin and Hillary Clinton.

“I think the two most logical suitors are Hachette and HarperCollins,” said one source.

Brian Murray, CEO of HarperCollins (which, like The Post, is owned by News Corp) admits he’s in the hunt. “HarperCollins has been interested in gaining scale through organic growth and acquisitions of other companies,” he told the Wall Street Journal. “Any time a publishing company is on the market, we’d like to take a look.”

On the private equity side, one source pointed to Henry Kravis’ KKR & Co. as a potential bidder. The source noted that it would round out KKR’s purchases of audio publisher RB Media and e-book company OverDrive in recent years.

ViacomCBS and Lion Tree declined to comment.

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