Penton and PTN talk alliance

Folio: The Magazine for Magazine Management, May 15, 1995

A spin-off of Penton Publishing from parent company Pittway Corp. has been rumored for years. Now, Melville, New York-based PTN Publications is the latest publisher to consider a strategic relationship - or merger - with Cleveland-based Penton. Penton CEO Sal Marino won't comment on the talks, and PTN chief Stanley Sills did not return phone calls.) The combination would make sense for both companies.

A strategic alliance or merger would provide Pittway shareholders with a tax-free method of spinning off the underperforming publishing unit. (Pittway's main revenue source is the alarm and security business.) An outright sale, however, would leave shareholders facing a double tax penalty - first Pittway and then investors would have to pay tax on the capital gains. PTN, financed by investment bankers Golder, Thoma, Cressey, Rauner Inc., is searching for an ultimate exit strategy. A deal with Penton would greatly increase PTN's revenues (estimated at more than $70 million), and stronger economies of scale would make the company more attractive to a potential buyer or the public markets. Penton's numbers improved last year, but margins were still lower than industry averages because of excess management layers and an abundance of properties in mature fields. The publishing and printing segment of Pittway generated operating income of $11 million on revenues of $177 million in 1994; the corresponding totals in '93 were $7.2 million and $164.6 million.