Paragon founder nets £3m from takeover

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The Independent Online

Highbury House, the publisher of Front and Real Homes magazines, made a £32m offer for the technology publisher Paragon yesterday to boost its consumer titles, in a deal that will net Paragon's managing director £3m.

"I made a six-figure investment in Paragon through a management buy-in in 1999," Mark Simpson, the managing director of Paragon, said yesterday. "I am very happy to have made a seven figure return. You never go in to these things with the greatest of comforts. I put my house on the line and took a big risk for my family."

The acquisition will make Highbury the third largest publicly quoted consumer magazine publisher.

Paragon, which specialises in computing, video games and home entertainment titles, publishes 33 magazines, including Play, DVD Review, Powerstation and Digital Photography Made Easy.

"It has been our stated strategy to develop our consumer interests and with Paragon we get a very strong position in video games, digital photography and home entertainment," Ian Fletcher, the chief executive of Highbury, said. "These are some of the fastest growing areas of publishing. Paragon had been on our radar for some time."

The group recently said it was in talks to sell its business communications division, and yesterday said discussions were still continuing. Mr Fletcher also said trading in the five months up to the end of May had slipped below that of last year, following a fall-off in advertising and news-stand sales in April and May.

But he said current indicators showed there had been an improvement in the advertising order book and the board "looks forward to the rest of the year with confidence".

Mr Simpson, 48, who was backed by the venture capital firm 3i, will join Highbury's board. About £1m of the acquisition will be paid for through the issuance of new Highbury shares, and the remainder will be paid in cash.

3i, which owns 65 per cent of the company, will receive about £13m in cash. A further 13 per cent of the company is owned by management, who have elected to take no more than 50 per cent of their holding as Highbury shares. Paragon made an operating profit of £2.8m last year, 43 per cent up on the previous year.