Perseus Makes Formal PGW Offer; Levy Next?

by Jim Milliot, PW Daily -- Publishers Weekly, 1/22/2007

The Perseus Books Group made it official this morning, announcing that it had made an offer to acquire "substantially" all of the distribution contracts of PGW, the distribution unit of bankrupt AMS. As previously reported here, Perseus is offering to pay all PGW clients 70% of the money owed to them by PGW, but not paid because of the Chapter 11 filing, in exchange for taking over distribution. In addition, Perseus will pay PGW's operating costs for a five-month transition period following closing of the agreement. The deal is subject to approval by the bankruptcy court, and AMS will file a motion later this week to get that approval.

Perseus said that PGW's two largest clients, Avalon and Grove/Atlantic, have signed agreements with Perseus and have agreed have their contracts assigned to Perseus. Earlier this month, Perseus reached an agreement to acquire Avalon. If the court approves the proposal, PGW will continue to provide distribution services for publishers before ultimately transferring their books and operations to Perseus's distribution facility in Jackson, Tenn. It is unclear what the long-term role for PGW staff will be in the Perseus operation.

With an offer to resolve PGW on the table, sources say that Levy Home Entertainment is still working on a bid to acquire AMS's warehouse club business. No comment from AMS or Levy on the reports.