TORONTO — Corus Entertainment has sold the kids’ book publishing house Klutz to Scholastic for $43 million in cash plus a three-year earn-out based on revenue.
Toronto kidvid production house Nelvana purchased Palo Alto-based Klutz in spring 2000 for $74 million, just as the publishing business went into a slump and Klutz’s two main distributors filed for Chapter 11. Nelvana was acquired six months later by specialty TV and radio company Corus Entertainment of Toronto.
Corus president and CEO John Cassaday announced plans to reduce debt, improve operating margins and focus on core assets in November. “Books and specialty publishing would not have been considered core,” said Corus group director of communications Kerry Morgan.
“Buying Klutz makes sense for Scholastic; with their infrastructure and expertise in that business, I’m sure they’ll be able to revive the brand and turn it into a moneymaker,” said Scott Cuthbertson of TD Securities in Toronto. “And for Corus, they can get it off their balance sheet, reduce their debt and free up their management time to focus on their core business.”
Proceeds of the sale will go toward Corus’ debt, which Morgan said is “on target” to hit C$600 million ($376 million) at the end of Corus’ fiscal year, Aug. 30.