When money management magazine and website Forbes Media LLC is sold, likely to Fosun International Ltd., the Chinese conglomerate that has taken the front-runner position in the company's auction, sources said, it will be for a much lower price than private equity minority stakeholder Elevation Partners LP was hoping to receive.
Two sources said it is likely Fosun will acquire Forbes, and that it will pay less than $250 million for the magazine. The founding Forbes family is also expected to retain a stake in the business, a source familiar with the situation said. The deal has not been fully hashed out yet, but sources said an agreement should be reached shortly.
Estimates for the company's auction - which Deutsche Bank AG was hired last fall to run - have differed wildly at times. A Wall Street Journal report earlier this year noted hopeful sell-side expectations of a sale in the $400 million to $500 million range.
Though Elevation has already written down the $264 million it invested in 2006 to $120 million, according to a Fortune report, its possible that the private equity firm could still secure a slight internal rate of return bump, and not a loss. Elevation has preferred stock, meaning it will receive virtually all of the sale proceeds, provided it is at or less than $250 million.
"Given the financial performance, I'm not surprised the bids came in below expectations," said one private equity source, which declined to be identified.
Financial performance including 2012 revenue of about $138 million, another source said, about half of what has been reported.