GMG set to write-down Emap investment by at least £100m, report

Guardian Media Group is set to write down the value of its investment in Emap to the tune of between £100m and £200m, the Sunday Times reports.

GMG invested in Emap along with private equity company Apax in 2007 – buying the business to business publishing arm of the magazines giant for £1bn. GMG put up £300m of the purchase price.

GMG told the Sunday Times: “Any impairment of our investment would be an accounting technicality, a paper loss with no impact on the company’s cash position.”

It follows a similar move by Apax in June 2009, when it wrote-down the value of its stake in Emap by 50 per cent, writing-off of the £300m cash part of its investment. The remaining third of the business was paid for through borrowing by Emap.

It all means that if GMG and Apax were to sell Emap now, they would only recover a fraction of the money they spent. All that could change if the economy bounces back, and Emap’s profit margins have proved to be pretty robust so far.

Peter Kirwan did a detailed blog post on this in June when, incidentally, he predicted that GMG would probably have to write down the value of its Emap holding.