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Time Inc., Meredith Shares Rise After Mega-Deal Announced

Investors sent the stocks of both Time Inc. and Meredith up Monday, after the companies’ announcement Sunday evening that Meredith reached an agreement to acquire Time Inc.

Shares of Time Inc., not surprisingly, opened up 9.2% at $18.45 per share and hovered around there through morning trading. Wall Street responded enthusiastically to Meredith’s move, pushing the stock up as much as 16% Monday, before settling down in midday trading to about 10% over the media stock’s previous closing price.

Meredith’s bid for Time Inc. is for $18.50 per share, with the deal valued at $1.85 billion excluding debt. The companies expect the transaction to close in the first quarter of 2018, with the merged entity expected to yield $400 million-$500 million in cost synergies in the first two years.

The proposed all-cash deal is backed by $650 million from Koch Equity Development, the investment arm of Koch Industries, an industrial conglomerate headed by politically conservative multi-billionaire brothers Charles and David Koch. Meredith has taken pains to emphasize that the Koch group will have “no influence on Meredith’s editorial or managerial operations” with the financing, nor will Koch Equity Development have a seat on the company’s board.

Despite Wall Street’s bullishness about the combo, there remain big questions of how well Meredith and Time Inc. will be able to fuse their operations — especially given their divergent corporate cultures.

Meredith, based in Des Moines, Iowa, has cultivated a stable of family-friendly brands like Better Homes & Gardens, Parents and Family Circle, along with 17 TV stations across the U.S. For its part, Time Inc. has been a mainstay of New York City’s media landscape for nearly 100 years, with flashier brands that include People, Time, Sports Illustrated, Entertainment Weekly and Fortune.

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