Publications International Sells Kids' Unit to Toy Company

by Jim Milliot -- Publishers Weekly, 6/23/2008 8:00:00 AM

Publications International, one of the country’s largest publishers of electronic and traditional storybooks, has sold its children’s division to RC2 Corp. for $163 million in cash. For the 12-month period ended March 31, PI’s children’s publishing group had sales of $112 million with an operating income margin in the mid-teens.

RC2, based in Oakbrook, Il., bills itself as a leading designer, producer and marketer of toys, collectibles, and infant and toddler products. Its products are sold under the Learning Curve, Johnny Lightning and Ertl brands. Like Publications International, the company’s major customers include warehouse clubs and other big box retailers. It had sales in 2007 of $489 million and earnings of $21.7 million. It has no publishing operations.

Curt Stoelting, CEO of RC2, said in a statement that the purchase “is consistent with our strategic plan to complete synergistic acquisitions which strengthen and diversify RC2’s business. The children’s publishing business is a strong strategic fit with our Learning Curve brand.”  Although most details about how RCs will integrate the publishing unit into its operations weren’t available this morning, the company said it hopes to realize cost savings between $8 million and $10 million over the next two years.