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AXP to Divest Publishing Business

Zacks Equity Research

Recently, American Express Company (AXP) announced that it will divest its subsidiary American Express Publishing Corporation to Time Inc., a division of Time Warner Inc. (TWX), a leading global media company for an undisclosed amount. American Express has been associated with Time Inc. for the past twenty years.

American Express Publishing Corporation provides affluent consumers with reliable information regarding luxury lifestyles through its five multi-media magazines, namely, Travel + Leisure, Food & Wine, Departures, Executive Travel and Black Ink.  

The divestiture is expected to culminate in the fourth quarter of 2013 and is subject to customary closing conditions. This is about the same time when Time Inc is scheduled to separate out of Time Warner and operate independently, so that the latter can focus on its TV networks and Warner Bros, studio. Post the sale, American Express Publishing Corporation will become a wholly owned subsidiary of Time Inc. However, eligible AXP Card Members will continue to receive the Departures, Black Ink and Executive Travel magazines of American Express Publishing.

American Express Publishing that has been a subsidiary of American Express since 1968 has succeeded in delivering excellent editorial products. However, as of recently, the holding company has been facing problems to engage in non-financial activities owing to banking regulations. Thus it decided to divest this publishing business to Time Inc. with which it has been associated for two decades now for receiving management services from the same. Time Inc., one of the leading names in the media industry was selected as the ideal partner for the deal as it is expected to complement American Express Publishing’s operations. Going forward, AXP expects to take up initiatives to promote and market American Express Publishing for Time Inc.  

American Express Publishing Corporation has been focused to provide its readers with lifestyle information so that they can make informed decisions. Its brands are being published in more than 70 countries with 25 editions and in nine languages. On the other hand Time Inc. is an esteemed name in the same sphere. The combination of the two is expected to create synergies that would enhance American Express Publishing’s brand value further.

American Express currently carries a Zacks Rank #3 (Hold). Among other payment services companies, FleetCor Technologies Inc. (FLT) and SS&C Technologies Inc. (SSNC) carry a favorable Zacks Rank #2 (Buy) and appear impressive.

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