Scholastic Invests in 9 Story Media
Scholastic the global children’s publishing, education and media company, announces that it has closed its previously announced definitive agreement to invest in 9 Story Media Group, after receiving a satisfactory opinion from the Minister of Canadian Heritage with respect to the transaction, in addition to satisfying customary closing conditions.
The transaction further enhances Scholastic’s development, production and licensing interests, expanding opportunities to leverage its trusted brand and best-selling publishing and global children’s franchises to build deeper connections with young people around the world across print, screen and merchandising. Scholastic has acquired 100% of the economic interest and a minority of voting rights in 9 Story for CAD $250 million (approximately USD $182 million) from an affiliate of private equity firm ZMC and other selling shareholders.
9 Story Media Group will continue to be led by President and Chief Executive Officer Vince Commisso. Scholastic Entertainment (“SEI”) will continue to be led by Iole Lucchese, Scholastic Board Chair and President, Scholastic Entertainment.
Peter Warwick, President and Chief Executive Officer of Scholastic, said, “We are thrilled to add 9 Story’s industry-leading children’s content production, distribution and licensing capabilities, extensive content library, and highly talented team to Scholastic’s portfolio. Together, we can leverage our combined scale to grow Scholastic’s children’s franchises, drive book sales and create new opportunities to introduce millions of children to our stories. I’m confident that our shared mission and collective expertise will spark innovation and creativity across the entire IP life cycle, supporting our 360-degree content creation strategy and our opportunity to meet the strong demand for high-quality kids and family entertainment.”
Ms. Lucchese added, “Building upon the strong foundation we’ve developed with the 9 Story team over the past 20 years, we’re excited to now participate in the full IP life cycle by combining Scholastic’s ability to create IP that kids love with 9 Story’s best-in-class ability to produce, distribute and license it. In today’s world, it’s ever more important that we meet kids where they are, and we look forward to expanding our work with our colleagues to bring kids back to our iconic brands and stories.”
Mr. Commisso said, “We’re thrilled to start this new chapter and build on our long-standing relationship with Scholastic. Together we will continue to deliver high-quality, engaging content for kids and families, while significantly expanding our joint ability to build franchises on a global scale.”
Financial Details
Scholastic has initially funded the transaction from its available cash and its revolving credit facility and anticipates maintaining its regular dividend and its authorized stock repurchase program.
The transaction is expected to contribute long-term earnings accretion, reduce the capital intensity of production and drive substantial improvements in top-line growth and bottom-line results through 9 Story’s existing content library, best-in-class production studios, and global distribution and licensing capabilities. Scholastic expects to provide further details on 9 Story and Scholastic Entertainment’s historical financial results and outlook, when it reports its fiscal 2024 fourth quarter results next month. Beginning in the current fiscal 2025 year, Scholastic intends to consolidate both businesses’ financial results in a new reporting segment.
Advisors
CDX Advisors acted as exclusive financial advisors to Scholastic. Baker & McKenzie LLP, Dentons Canada LLP and Mason Hayes & Curran LLP served as Scholastic’s legal counsel in the transaction.
Barclays acted as exclusive financial advisor to 9 Story. Sidley Austin LLP served as ZMC’s legal counsel and Goodmans LLP served as 9 Story’s legal counsel.
