IN THE sixth newswire deal this year, Canada’s second largest news release distributor CCNMatthews is being acquired by the private equity arm of Canadian pension fund OMERS.
The cash deal, terms of which were not disclosed, will also see Manulife Capital, the private equity group of insurer Manulife Financial, take a minority stake.
Newswires have historically been highly profitable. In recent years, they have benefited from new corporate disclosure regulations that have driven public companies to issue more frequent and longer news releases.
Threat of new technologies
However, new technologies such as RSS threaten to disrupt the news release business. One highly placed executive with a large U.S. newswire service confided to me recently that he believes RSS will be the undoing of the traditional newswires.
U.S. Securities and Exchange Commission chairman Christopher Cox, in response to a request from Sun Microsystems to revisit the information dissemination requirements of Regulation FD, signaled his willingness to review requirements for companies to use newswires to disseminate information.
However, in a statement Paul G. Renaud, President and CEO of OMERS Capital Partners, said: “We view CCNMatthews and Market Wire as industry innovators delivering exceptional financial results. The opportunity they represent is consistent with our strategy to invest in strong, well-managed businesses with the potential to grow.”
String of deals
The string of newswire acquisitions this year was set off in March when Warren Buffett’s Berkshire Hathaway purchased Business Wire from its private owners. That same month, Euronext, the pan-European stock exchange being acquired by the New York Stock Exchange (NYSE), purchased Paris-based CompanyNews.
The following month, CCNMatthews purchased Market Wire, which had to that point been the preferred newswire partner of the Nasdaq exchange’s corporate services group.
However, in September Nasdaq pounced on the privately owned San Francisco-based PrimeZone newswire service. The exchange hopes to bundle newswire and website services into its listing fees, a move that has prompted widespread controversy and raised questions about conflicts of interest.
Then earlier this month, Euronext moved to bulk up its CompanyNews operations by acquiring the newswire assets of Hugin ASA of Norway for 20.5 million Euro ($27.3 million). Newswires see Europe as a growth market due to the new Transparency Directive regulations that kick in next month.
In all of the deal making, the NYSE appears to have missed out, although it will become a newswire owner by default via its purchase of Euronext. However, to complement its European newswire assets, the NYSE may look to buy a North American newswire business.
That would make OMERS’s purchase of CCNMatthews a potentially shrewd investment if it can flip the newswire to NYSE — or even Nasdaq — for a quick profit. Meanwhile, it was reported last month that United Business Media was willing to sell its highly profitable PR Newswire business. The private equity group Apax was said to be preparing a bid.
In October, PR Newswire itself bought U.S. Newswire for $19 million with an earn-out of up to $4 million from Medialink Worldwide.
Interesting chess game going on, isn’t it?
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