Softbank to Acquire Ziff-Davis Publishing : Merger: The $2.1-billion deal marks Masayoshi Son’s latest step in becoming a worldwide player in computer technology.
The world’s largest publisher of computer and technology magazines, Ziff-Davis Publishing Co., will be acquired by Softbank Corp., a rapidly expanding Japanese firm, the two companies said here Thursday.
The $2.1-billion deal, which was anticipated, marks the latest step in a drive by Softbank’s president, maverick entrepreneur Masayoshi Son, to become one of the biggest players in the global market for computer-related publishing, software distribution and advertising.
Earlier this year, Son acquired the huge Comdex computer trade show and related operations for $800 million, and last year he bought Ziff’s trade-show division for just more than $200 million.
Ziff-Davis Publishing was acquired from the Ziff family only last year by the New York investment firm Forstmann, Little & Co. for about $1.4 billion. While Forstmann said at the time that it planned to operate the magazine company for a long time, Son made an offer too rich to turn down--and too rich to be prudent, some analysts believe.
Son had tried to buy Ziff-Davis last year but was outmaneuvered by Forstmann, largely because of concerns over Softbank’s ability to finance the deal.
New York-based Ziff-Davis publishes PC Magazine, PC Week and other influential computer magazines with worldwide revenue this year estimated at about $1 billion. It controls about half of the $1.7-billion U.S. computer magazine market.
In the agreement announced Thursday, Softbank would pay $1.8 billion to buy Ziff-Davis, while MAC Inc., Softbank’s largest shareholder, would spend $300 million to buy some Ziff-Davis assets. To finance the purchase, Softbank has already raised about $640 million through a new share issue and $500 million by selling bonds.
Softbank is already Japan’s largest publisher of high-technology magazines. Son said he aims to boost total global annual circulation of Ziff-Davis magazines to 50 million copies within 10 years, from about 9 million this year. This will be done partly by boosting the number of different publications to about 1,000, of which 700 would be published under license in smaller countries, often in languages other than English, he said.
Son said he has already expanded Comdex’s global presence by boosting the number of trade show locations from 14 at the time of purchase to 24 currently, with negotiations under way for an additional 14 locations. Son estimated Ziff-Davis would add $65 million to Softbank’s pretax profit during the fiscal year that ends March, 1997.
At Thursday’s news conference, Son compared computers to cars, and said that “a network of highways, signals and gas stations” is needed “for the smooth running of an automobile.” His goal, he said, is to play a major role in providing the equivalent global infrastructure for the smooth running of computers.
“In the 21st Century, we would like to be a leading company of the world,” Son said.
Son is known variously in Japan as Son San, Japan’s Bill Gates, and “the digital man,” and the story of his entrepreneurial drive is legendary in a country that has few such personalities.
An ethnic Korean in a nation where Koreans suffer routine discrimination, Son was born on Japan’s southern island of Kyushu, where his parents were squatters. He moved to the United States at age 16 and earned an undergraduate business degree from UC Berkeley.
It was there that Son made his first million, inventing an electronic dictionary that is used today in the Sharp Wizard. He doubled his fortune importing Japanese video games to the Berkeley area, and returned to Japan in 1980 to start a software distribution business.
Son’s plan is to dominate the infrastructure for the computer industry, and as the industry evolved he has sought to achieve his aim in different forms, whether it be distribution, publishing, services or trade shows.
It hasn’t always gone smoothly. In the early 1980s, Son had to relinquish the presidency of the company when he was hospitalized with hepatitis. In 1991, Son lost $10 million in an on-line shopping venture. And a joint venture with Perot Systems to provide systems integration in Japan was disbanded when there proved to be no market for it.
But Son has earned accolades for blending openness with aggressiveness in a manner unconventional in Japan. At the company’s general stockholders’ meeting earlier this month, Son allowed free access to the news media, an unusual move.
“We don’t make our stockholders’ meetings formal,” he told reporters. “I like to explain things in detail in my own words. Difficult questions are welcome. If there aren’t any, I’ll call on someone.”
And observers say he’s fast becoming a force to reckon with for global competitors.
“He’s clearly ahead of the rest of his country in realizing it’s a lot more interesting to own a publishing house than a bunch of computer production lines,” says Esther Dyson, editor of Release 1.0, an influential computer trade newsletter.
The Ziff-Davis purchase would boost the Softbank group’s total employment to 6,000, up from 600 in 1994. It also gives Softbank a stake in electronic publishing through Ziff’s ZD Net service, which provides computer-related information over U.S. on-line services and the Internet.
Also working in Son’s favor is that publishing and trade shows complement each other, because advertisers in computer publications typically are the same companies that pay to participate in trade shows.
Still, some believed Forstmann was already paying too much last year, and Ziff family patriarch Bill Ziff has long been known as a shrewd deal-maker who got top dollar whenever he sold something.
Holley reported from Tokyo and Harmon reported from Los Angeles.