Harcourt Brace Jovanovich Inc., the publisher and amusement park operator, said Monday that it has agreed to sell its business magazine, trade show and school supply operations for $334.1 million to a group of company executives and Wall Street investors.
The leveraged buyout, expected to close by the end of the year, essentially completes the asset sales Harcourt undertook earlier this year to reduce the $3-billion debt that it assumed to thwart an unwelcome takeover attempt by British publisher Robert Maxwell.
The latest sale includes HBJ Publications, which publishes 110 professional and industry periodicals and conducts trade shows, and Beckley-Cardy, a nationwide school supply distributor. Among the HBJ magazines being sold are six published in Santa Ana, where HBJ Publications has maintained its West Coast headquarters since 1985.
The sale leaves Harcourt, which is based in Orlando, Fla., with its core businesses of textbook and general book publishing, assorted life insurance operations and five amusement parks, including Sea World in San Diego.
The acquiring group is headed by Robert L. Edgell, Harcourt's vice chairman, and includes other high-ranking Harcourt executives as well as the New York investment firms of Kidder, Peabody & Co. and Wickes Communications and Joel Labovitz, a Duluth, Minn., investor.
Edgell's management group and Kidder will control the new company, which will be named Edgell Communications and be based in Cleveland.
Donald J. Gogel, managing director of Kidder's merchant banking group, said the financing will include a combination of equity investments by all participants, bank loans and high-yield "junk bonds." He said Kidder would provide short-term bridge financing between the close of the sale and the issuance of the bonds.
Harcourt's magazine sale is one of several announced within the past 18 months and appears to have taken full advantage of the escalating value that investors are placing on the staid and stable business of professional and trade journal publishing.
"It's a stable franchise," Robert Dunlap, an analyst with Brown Bros. Harriman & Co. in New York said of specialized magazine publishing. Dunlap said the Edgell group's purchase price was not surprising in today's market.
Still, at least one analyst questioned the wisdom of the deal because it cuts too close to Harcourt's primary publishing operations. "They are selling part of their main structure, and that's not good," said Ivan Obolensky, an analyst with Josephthal & Co. in New York. "They are just walking away from their strongest suit . . . and invading a key area and getting too close to the real guts of the business."
The 110 Harcourt publications, which have a combined circulation of 2.4 million, serve a wide range of occupations and industries and include such journals as Modern Medicine, Hotel and Motel Management, Bicycle Dealer Showcase and Flotation Sleep Industry.
The Beckley-Cardy unit distributes educational supplies and equipment ranging from desks and football bleachers to pencils and erasers.
Harcourt officials said revenue from the two units totaled $189 million last year, while combined after-tax profits were $21 million. Total Harcourt revenue in 1986 was $1.5 billion and profit was $187 million.
The company said the sale, when added to other assets to be sold in 1987, should generate about $370 million, more than enough to satisfy the obligations that it undertook with its takeover-thwarting recapitalization plan.