Taking it easy

Contact: Ben Kolada

J2 Global has announced the acquisition of Backup-Connect International, another characteristic play of its usual M&A strategy. Although its recent purchases of Ziff Davis and IGN Entertainment seemed to signal that j2 would focus on larger and inherently more difficult acquisitions, we read the company as still being more of an opportunistic acquirer – taking what it can if the taking is easy.

At a high level, the acquisition of Netherlands-based Backup-Connect is yet another geographic play meant to add global depth to j2’s business continuity services. With Backup-Connect, the company has now announced four acquisitions in this sector: two in Ireland, one in the US and now one in the Netherlands.

The fact that this is j2’s first foray into the Netherlands suggests that the country hasn’t historically been a strategic focus, although it does provide a handy base for continental European operations. Also, the company’s main dealmaker didn’t have to travel far to do the deal: j2’s global head of M&A, Jeroen van der Weijden, operates out of Amsterdam.

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Making sense of j2’s Ziff Davis acquisition

Contact: Ben Kolada

At first glance, j2 Global’s acquisition of Ziff Davis Media seemed to be a stretch. However, upon further review of j2’s M&A strategy and recently released financial statements for Ziff Davis, the company actually meets many of j2’s requirements for its diversification acquisitions: Ziff Davis has a strong management team, operates in a fragmented market and, perhaps most importantly, is increasing revenue.

Technology content provider Ziff Davis Media was a powerhouse in its time, but it struggled as consumers moved from print to digital media. Total revenue at the company declined from $300m in 2001 to $76m in 2007, when more than half of its revenue was still coming from print advertising.

Ziff Davis filed for bankruptcy in 2008, and was subsequently carved up in four transactions. The Ziff Davis chunk being acquired by j2 is owned by CEO Vivek Shah and Great Hill Partners. Shah, a digital publishing veteran with experience at Time Inc and the Fortune/Money Group, and his team helped turn around ailing Ziff Davis, bump up revenue and return it to profitability.

J2 released financial statements this week for Ziff Davis that show the company is in growth mode. Unaudited results for the nine months ended September 30 show revenue increased 70% over the prior year to $32m. In the 12 months ended September 30, the company generated almost $45m in revenue, with nearly $8m in EBITDA.

For anyone interested in what goes on in The 451 M&A KnowledgeBase, we’ve updated our merger record for j2’s acquisition of Ziff Davis and made it available for free. Click here to view the record.

For more real-time information on tech M&A, follow us on Twitter @MAKnowledgebase.

j2 Global anxious for growth

Contact: Ben Kolada

Cloud communications vendor j2 Global has acquired 85-year-old media firm Ziff Davis Media for $167m, undoubtedly the biggest strategic stretch of the 40 acquisitions it has done. The announcement comes just two months after j2 was rejected in its attempt to buy online backup firm Carbonite. The rapid-fire M&A attempts, and the oddball pairing with Ziff Davis, give the impression that j2 will eagerly spend its cash to buy top-line growth.

Founded in 1927, Ziff Davis is a technology media firm, operating the websites PCMag.com, Geek.com, ExtremeTech.com, ComputerShopper.com and Toolbox.com (the latter two sites were acquired this year). It has been sliced and diced throughout its lifetime. According to The 451 M&A KnowledgeBase, in just the past three years Ziff Davis has done five divestitures.

Although j2 didn’t provide a clear rationale for the deal, it notes that the company has years of experience in digital media and online marketing and that this acquisition would expand that experience. It claims that its experience in this market comes from its own spending on advertising, as well as from its email marketing product, Campaigner, which j2 obtained only in December 2010 as part of its Protus IP Solutions purchase.

Reading deeper into the announcement, however, the primary rationale for this transaction seems simply to add to j2’s top line. With this acquisition, j2 expects its total revenue this year to exceed the top of its previously guided $345-365m range. Ziff Davis is expected to contribute $60m in revenue next year.

For more real-time information on tech M&A, follow us on Twitter @MAKnowledgebase.

j2 Global buys into CRM, nabs Landslide Technologies

Contact: Ben Kolada

J2 Global continues to diversify its business through M&A, this time with the acquisition of Landslide Technologies. The company’s latest deal, its second in as many weeks, is j2’s first CRM purchase – a stark contrast from its recent M&A plays, which have focused primarily on propping up its managed messaging business at home and abroad.

We’ve previously covered j2’s dealmaking, noting that the company has expanded via M&A from its core fax offering to now include a number of services for small businesses such as email, Web-based collaboration and even marketing. Landslide provides Web-based CRM SaaS, including online, social and mobile CRM applications, to SMBs.

Terms of the deal weren’t disclosed, but the majority of j2’s transactions have gone off for less than $15m. We see no reason why this acquisition would significantly diverge from this path. The company was likely cautious in its first move into the CRM market, meaning j2 likely paid at or below market valuations. And even with a possible premium given to the business because of its SaaS delivery model, we still doubt that the price was too high, considering an SEC report filed in December 2010 noted that Landslide’s revenue was $1m-5m.