HOUSTON — Gentlemen's club operator Rick's Cabaret International, Inc. has purchased ED Publications, Inc., the proprietor of an array of adult industry trade shows, websites and magazines including Exotic Dancer.
As reported by the Centre Daily Times, Rick's Cabaret paid $1.2 million for the Clearwater, Florida-based company, which also publishes TEEZE and Adult Store Buyer. The latter two magazines jointly oversee new tradeshow StorErotica, held in conjunction with the umbrella firm's annual Gentlemen's Club Owners Expo in Las Vegas, scheduled this year for August 24-28.
ED Publications owner Don Waitt enters a three-year agreement under the deal as president of new Rick's Cabaret media division RCI Entertainment Media Holdings, Inc. An additional earn-out of up to $2 million over the three years is provided in the purchase agreement, contingent on certain performance benchmarks of the media division.
At closing, Rick's Cabaret issued 21,740 shares of restricted common stock valued at $23 per share and paid $500,000 cash for the publishing company, and will pay an additional $200,000 six months after closing. If the performance benchmarks of the RCI media division are met, an additional 65,217 shares of restricted common stock and $500,000 cash could be paid out.
"In addition to their strong cash flow, the acquisition of these preeminent trade publications will enable Rick's Cabaret to create new marketing synergies with major industry product suppliers and new national advertising opportunities," said Rick's president and CEO Eric Langan. "It also provides us with additional diversification of our revenue and income streams while remaining within our core competency."
Founded in 1991, Exotic Dancer is circulated to 3,800 gentlemen's clubs in North America. Adult Store Buyer is published bimonthly and goes to more than 10,000 adult retailers. TEEZE also is bimonthly and is distributed to retailers and vendors of lingerie and erotic apparel. The media group also owns over 25 industry websites.
"After 17 years operating the adult nightclub industry's only national trade magazine and industry convention, I look forward to being associated with Rick's Cabaret, which as a major industry player has an infrastructure in place that will allow us to take the service we offer to a much higher level," said Waitt. "We have very exciting new media ventures and national promotions in the works that will benefit Rick's Cabaret and the industry as a whole, as well as broaden the appeal of adult nightclub entertainment to consumers."
ED and Rick's have combined revenues of $2 million per year and earnings before taxes, depreciation and amortization of approximately $670,000. Earnings are expected to rise as a result of the merger by approximately $.05 per share annually.
Rick's Cabaret is a publicly traded corporation (NASDAQ: RICK) operating upscale adult nightclubs in New York, Miami, Philadelphia, New Orleans, Charlotte, Dallas, Houston, Minneapolis and other cities under the names Rick's Cabaret, XTC, Club Onyx and Tootsie's Cabaret. Rick's also oversees a number of adult-related websites.
