TORONTO - Torstar Corp., owner of the Toronto Star and other newspapers, is selling the Harlequin book publishing company for $455 million to global media company News Corp. and it will be run as a division of HarperCollins Publishers.
Torstar (TSX:TS.B) says the sale will strengthen its financial position and a portion of the net proceeds will be used for debt reduction.
Harlequin, known for its romance books, has been part of Torstar for 39 years.
Torstar has said lower revenues were the primary challenge at Harlequin as the book publishing company adjusted to the digital environment.
Harlequin has more than 350 employees in Canada, and Torstar says HarperCollins has indicated that Harlequin will remain headquartered in Toronto.
Harlequin publishes the work of more than 1,300 authors and releases more than 110 titles monthly through publishing operations in 16 countries. About 95 per cent of Harlequin's revenues are from outside Canada.
Torstar acquired a controlling interest in Harlequin in 1975 and acquired the remaining interest in 1981.
"While making the decision to sell has been difficult, we are confident that this transaction represents excellent value for Torstar shareholders and it also further strengthens the financial position of Torstar," said David Holland, president and Chief Executive Officer of Torstar.
"This sets the stage for the next chapter in the Harlequin story. HarperCollins is a very well-respected publisher with a tremendous track record of success and will be a good home for Harlequin," Holland said in a statement on Friday.
HarperCollins president and CEO Brian Murray said the acquisition will broaden HarperCollins reach.
"Harlequin's business has grown internationally, and will give HarperCollins an immediate foothold in 11 new countries from which we can expand into dozens of foreign languages for authors who choose to work with us globally," Murray said.
The transaction, subject to approvals, is expected to close later this year.
Torstar recently reported in its fourth quarter that its book division's revenue dropped to $95.02 million from $104.99 million in the fourth quarter of 2012, and its operating profit declined to $10.25 million from $14.81 million.
Its media operations faced continued pressure on print advertising revenues, although Torstar has said there was relative improvement in the fourth quarter.
Late last year, Torstar announced it was reorganizing the advertising sales operations at the Toronto Star, Canada's largest newspaper, and moving them to an affiliated company.
Torstar holds an investment in The Canadian Press as part of a joint agreement with the parent companies of the Globe and Mail and Montreal La Presse.
Note to readers: This is a corrected story. It corrects to say that Torstar will sell Harlequin to News Corp. and it will become a division of HarperCollins Publishers