Japan's Softbank Corp. is in talks to buy computer magazine publisher Ziff-Davis Publishing from investment group Forstmann Little & Co., according to Japanese media accounts and sources close to the situation.
Softbank, a major computer software retailer and magazine publisher, lost a bid for Ziff-Davis to Forstmann Little a year ago. Ziff-Davis is the leading publisher of computer magazines, with PC Magazine as its flagship.
Softbank on Friday signaled that it is contemplating a major deal when it said it will issue new shares to raise $628 million to acquire a computer-related company. Softbank wouldn't name the target company.
Softbank will sell 2.8 million new shares at an undetermined price. It will offer a stock dividend of 40% to bring to 34.65 million the number of issued and outstanding shares. A company spokesman said Softbank is planning to raise a similar amount of money again from other sources at an unspecified later date.
Nikkei English News reported that Softbank is now in talks to buy the unit for $1.5 billion. But people familiar with the situation said a sale, if it takes place at all, would be at a higher price.
In addition to PC Magazine, the purchase would give Tokyo-based Softbank seven Ziff business computer magazines, including two computer consumer magazines, 11 international publications, Ziff's market research group and Ziff-Davis Interactive, which provides on-line access to all of Ziff's publications.
Forstmann Little declined comment, and a spokesman for Ziff-Davis was unavailable to comment.
Softbank has a stated policy of expansion by acquisition and the company has been making inroads into the United States.
Last year Softbank paid $202 million for Ziff Communications Co.'s Interop Expositions, an operator of computer trade shows and conferences. In February, Softbank bought the rights to Comdex, the world's leading computer exhibition, for $800 million--a purchase that gave Softbank control of most of the computer-show business in the United States.
Then in June, Softbank joined Microsoft Corp. in a $5.35-million venture to convert video games for use on personal computers.
Softbank is led by entrepreneur Masayoshi Son, who is frequently called the "Bill Gates of Japan" after the Microsoft Corp. chief executive. The son of Korean immigrants who attended UC Berkeley, Son now owns 70% of Softbank.
Forstmann Little is a New York buyout company headed by Theodore Forstmann. The company paid $1.4 billion to buy the magazine group from the Ziff family, which retained an undisclosed minority stake in the publishing company.
In June, Forstmann Little said it raised $1.9 billion to finance acquisitions. The 17-year-old firm raised two funds from institutions since the beginning of the year--one that purchases the stock and the other that buys the junior debt to pay for acquisitions, people familiar with the fund said.
Forstmann raised the money because he depleted his funds when he bought Ziff-Davis Publishing, the fourth-largest magazine publisher in the United States.