Deal values Forbes at high price

Peter Kafka of Re/code writes about the deal announced Friday selling a majority stake of Forbes to international investors and notes that the deal, which values the media company at $475 million, seems high.

Kafka writes, “The fact that Forbes was able to find a buyer at anything close to that price will surprise many media observers. Last fall, when Time Inc. was still a part of Time Warner, the publisher offered to buy Forbes for $175 million. This year, Forbes reps were positioning it for a much higher sale price, but prospective buyers like German publisher Axel Springer and Chinese holding company Fosun didn’t bite.

“In a document distributed to prospective buyers last year and published by analyst Ken Doctor, Forbes said it expected to generate profits of $21 million on sales of $145 million. Forbes CEO Mike Perlis wouldn’t comment on those figures but said the company has ‘delivered on our plans, consistently, over the past six years.’

“In 2006, investor Elevation Partners bought 45 percent in Forbes for about $265 million, and subsequently wrote most of that investment down as Forbes and other business magazines struggled. Elevation sold all of its stake in the new deal.

“Forbes magazine dates back to 1917, but didn’t really hit its stride as a mainstream publication until the 1960s, when it earned a reputation for both lionizing and criticizing business moguls. Today the company is primarily driven by its Web site, which relies heavily on contributors who write for little or no pay. Forbes.com has a U.S. audience of 28.5 million users, according to Comscore.”

Read more here.