Macmillan India Limited announced that it had acquired an 80% stake in Indian book publisher Frank Brothers in November 2007. The Macmillan India web site, their 2007 Annual Report, and the Frank Brothers web site provide more details on Frank Brothers and the acquisition.
- FRANK BROTHERS & CO. (PUBLISHERS) LTD, New Delhi was set up by Shri. K. L. Govil, a dedicated educationist, in 1930. It started off as a proprietary concern which was later converted to a partnership. The Company was incorporated as a private limited company in 1977 and converted into public limited company in 1993. Their web site has more on their early years.
- "Frank Bros (FB) is one of the oldest publishing houses in India and is engaged in publishing of quality education books for schools, institutes, government and other educational intermediaries. Frank Brothers is today one of the most reputed brands in the field of school publishing and has more than 1000 active titles in all subjects catering to the needs of ICSE and CBSE students and professional institutes in the areas of hotel management and tourism. Frank Brothers operates through 10 offices all over India with its Head Office at New Delhi and enjoys excellent relationship with around 10,000 Schools and institutions, and trade links with around 5,000 booksellers across India."
- FB's annual turnover for the financial year ended March 2007 was Rs. 31.5 crores.
- FB's sales in the month of December 2007 was Rs. 2.46 crores with a profit before tax of Rs. 20 lakhs for the month.
- FB's sales in the JFM quarter of 2008 was Rs. 22.33 crores. Macmillan India's total publishing sales for the same period, including FB's sales, was Rs. 31.5 crores.
- FB had a paid-up share capital of Rs. 25 lakhs (2,500 shares with a face value of Rs. 1,000 each) and reserves of Rs. 1.78 crores as on December 31st 2007.
- FB had assets of Rs. 26.53 crores and liabilities of Rs. 24.5 crores as on December 31st 2007.
- FB had 225 staff as on December 31st 2007.
- Macmillan had acquired an 80% stake in FB in November 2007 for a sum of Rs. 32.87 crores and has committed to purchase the balance 20% stake for Rs. 9.43 crores (if purchased before Sep 30, 2008) or for Rs. 10.83 crores on or before June 30, 2009.This effectively values the transaction at about Rs. 43 crores (~US$ 10 million).
Macmillan's publishing business focussing on publishing for schools has gotten a big boost thanks to its acquisition of Frank Brothers.
Subsequent to the acquisition, Macmillan India has announced that it is planning to demerge its publishing business and hive it off into a separate company to be called Macmillan Publishers India Limited (MPIL) and has called for an EGM in August 2008 to consider the demerger.
For perspective, in an earlier transaction, Cambridge University Press acquired a 51% stake in Indian publisher and distributor, Foundation Books for a sum of £2.7 million (~ US$ 5 million) on July 17, 2006. Foundation Books was subsequently renamed as Cambridge University Press India Private Limited. Foundation Books had declared revenues of Rs. 25 crores for the fiscal ending March 31, 2006. According to the Cambridge University Press 2007 Annual Report, CUP India's revenues grew by 25% post-acquisition to Rs. 31 crores for the fiscal ending March 31, 2007, which is on par with the revenues of Frank Brothers for the same period.
Are these transactions likely to pave the way for more such acquisitions in the Indian book publishing sector, with plenty of family owned publishing firms? Unlikely. Subroto Majumdar, the then head of Pearson India had stated in an NBT seminar in mid 2007 that Pearson India had seriously considered acquisitions of Indian publishing companies, but gave up after coming across due diligence issues, presumably in terms of copyrights and contingent liabilities.
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