Scholastic to Acquire Grolier for $400 Million
Scholastic Corp., the children's publishing and media company, on April 13 said it agreed to buy Grolier Inc. for $400 million in cash.The purchase, which is expected to close by June, will strengthen Scholastic's presence in the direct-mail home book club market and expand its customer base for building online traffic.
"The combination of Scholastic's and Grolier's more than 4 million family household accounts per year will provide exceptional cross-selling opportunities, enabling us to greatly expand the number of accounts we serve through the Internet," said Scholastic's chairman, president and CEO, Richard Robinson, in a prepared statement.
Grolier, Danbury, CT, which is owned by French conglomerate Lagardere S.C.A., had revenues of about $450 million in 1999 and earnings before interest, taxes, depreciation and amortization of about $45 million. The company, which markets children's books, encyclopedias and other reference materials to homes and school libraries, has a database of about 3 million active parent customers, focusing on children under age 6. New York-based Scholastic said it planned to transition the young customers of Grolier to become customers of Scholastic's school-age products, which are targeted to children ages 6 to 12.
Scholastic also said the acquisition would increase its presence in Southeast Asia, where Grolier has annual reference-book sales of about $30 million, and in the U.K., where Grolier has a $45 million direct-to-consumer book operation.
The purchase also will result in $20 million in annual cost savings through reductions in expenditures on order processing, fulfillment, manufacturing, distribution and overhead.
