Internet-focused media group Moneyweb has acquired Prescon Publishing for R5 million cash. It is the first acquisition Moneyweb has made since its June 1999 JSE listing and is effective from 1 March 2000.
Prescon is headed by Martin Spring and publishes four financial newsletters, with a subscriber base of 5 000. The deal includes a two-year service agreement with Spring, whereby he will become Moneyweb`s international editor based in London.
Moneyweb Holdings chairman Dr Andrew Smith says adding Prescon`s subscriber base to Moneyweb`s existing base of over 8 000 means the enlarged company now serves more than 13 000 high net-worth private investors.
Although Moneyweb feels the acquisition will be earnings-enhancing, Smith says the really exciting aspect of the deal lies in the ability of both businesses to offer a bigger range of their focused investment services to the enlarged client base.
Looking at the material impact of the deal, Moneyweb says if the deal had been effective for the six months to 30 September 1999, Moneyweb`s new earnings per share would be 60.5% down from 0.86c to 0.34c. Net asset value (NAV) would also have shrunk by 49%, with Prescon having a negative NAV at 31 January 2000. However, Moneyweb is confident the Prescon deal will significantly contribute to Moneyweb`s growth.
"On the other side, we will be refining the existing Prescon brands, which are published monthly, to become strategic investment tools. Our research has shown that a high percentage of the Moneyweb community would subscribe to a publication of this kind. We are confident the existing Prescon base will enjoy this refinement and will also find value in the online offerings," says Smith.
"Because of the high cost of printing and distribution, we have consciously stayed away from traditional print media. Newsletters, though, fall into our sweet spot - the margins are right and, in Prescon`s case, the focus is identical to Moneyweb`s existing target market."
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