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Battelle Turns Down $100 Million Offer For FM Publishing. Decides To Shop Around For a Higher Price.

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federated-media-logo.pngYesterday, news started circulating that Federated Media Publishing hired Savvian, a boutique San Francisco investment bank, to shop around the blog ad network to potential buyers. This action was taken after FM Publishing was approached by several investors. One investor, we have learned, put a $100 million buyout offer on the table for the entire company, which FM Publishing declined.

FM’s founder and CEO John Battelle has been down this road before. When he was running the Industry Standard during the dotcom boom, he got at least three firm offers to buy the budding media property, culminating in an offer for $750 million. Owning a small stake in the company, Battelle strongly urged controlling shareholder Pat McGovern, chairman of IDG, to take the deal. In Battelle’s own account, he recalls:

I tried for all of 2000 to get Mr. McGovern to let us sell the company to a stronger buyer, one who believed in our vision of the Internet Economy. He refused, and pushed us to go public instead. It was this very conflict that led to our differences and, partially, to our demise. I had three very real offers on the table that I took to McGovern, and three times he refused them, telling me that instead, we’d make more taking the company public or, at the very least, telling the potential buyer to double the price. Given that the price was between $250mm and $750mm, such a response was, to my mind, nonsensical. But he owned the majority of the shares, and his word was what mattered.

Now that Battelle is the controlling shareholder, you’d think he would be careful not to repeat that mistake again. He must be pretty confident that he can get more than $100 million for FM. (I was unable to reach him for a comment before posting this). Other investors from its $4.5 million A round two years ago include JPMorgan Partners, The Omidyar Network, The New York Times, Mitchell Kapor, Andrew Anker, Mike Homer, and Tim O’Reilly.

(Disclosure: FM Publishing controls a portion of the ad inventory on many blogs and social media sites, including TechCrunch.).

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