Hodder picks up Quercus for a song
March 26, 2014 | 4:25 pm
Hachette UK imprint Hodder & Stoughton has acquired Quercus Publishing, hitherto mooted as a potential acquisition target for Amazon Publishing. And the price was a fairly minimal £12.6 million ($20.8 million).
The full text of the cash offer document, available online here, states that: “Quercus is an international publisher with offices in London and New York. Quercus specialises in commercial fiction, non-fiction and children’s publishing in digital and print formats and incorporates the MacLehose Press, Jo Fletcher Books and Heron Books imprints. On 17 January, 2014, Quercus released its interim trading statement for the financial year ended 31 December, 2013, in which the Quercus Directors said that they expected Quercus to make a significant trading loss for the financial year. On 22 January, 2014, Quercus announced that it was conducting a formal sale process.”
In the same document, Tim Hely Hutchinson, Chairman of Hodder, states: “My colleagues at Hodder and I greatly admire what has been achieved at Quercus in a relatively short time. If our offer is successful, Quercus will become a distinct division within our company and will benefit from Hachette UK Group’s funding resources and sales reach to secure a very bright future for the Quercus Group.” Mark Smith, Chief Executive of Quercus, added: “Over the last ten years we have built Quercus into a £20m+ [$33m+] revenue business, with divisions in both the UK and North America. During this time we have helped debut authors become established bestselling brand names, published the international phenomenon that is the Millennium Trilogy and have built what we believe to be a world class roster of authors from across the globe. For the next phase of its development and to fulfil Quercus’ potential, we believe that Hodder and Hachette UK is the right home for Quercus.”
Bear in mind that the Millennium Trilogy, Quercus’s star franchise, had sold 73 million copies at end 2012 alone, and was cited by Swedish press at around the same time as having generated $14.8 million in the same year, and $44.8 million of profits in the period 2009-12, and you can see just how far Quercus has fallen. This also raises some interesting questions about the capacity of publishing companies to sustain, and retain, value in their product lines, especially when you bear in mind that the Hodder offer is an almost 145 percent premium to Quercus’s share price on its last trading day of March 24th.
Also, with ticket prices like this, any wave of publishing M&A is not going to make any investment bankers rich. In the Big Five big league we are not.