What’s behind the Time Inc. takeover?

Time Inc. decided that if its famous magazine titles such as Time, People and Sports Illustrated were going to survive the wrenching shift from print publishing to digital viewership, the company couldn’t do it alone.

And so Time agreed to be acquired by another magazine publisher, Meredith Corp., whose titles include Family Circle and Better Homes & Gardens, for $18.50 a share, or $2.8 billion, which includes the assumption of Time’s approximately $1 billion in debt.

Wall Street applauded the marriage and sent the stocks of both companies sharply higher Monday. Investors basically agreed with the assertion by Meredith, a Des Moines, Iowa, company that also owns 17 television stations, that the combined company’s larger scale and broader stable of popular magazines would draw more advertising dollars and other revenue in the digital age.

Meredith will use the deal with New York-based Time to become “a premier media and marketing company with an unparalleled portfolio of national media brands along with a highly profitable local-television business,” Meredith Chief Executive Stephen Lacy said on a conference call with analysts Monday.

In announcing the deal Sunday, Meredith said it would have “leading positions in celebrity, food, lifestyle, news and sports, parenting and home content creation.”

Meredith said both companies’ boards approved the deal, and it confirmed recent speculation that the billionaire Koch brothers would provide $650 million to help finance the purchase.

That speculation had led some media observers to question whether the brothers, Charles and David Koch, would use Time’s storied publications to promote their brand of conservative politics.

Meredith said the brothers would not have a seat on its board of directors and “will have no influence on Meredith’s editorial or managerial operations.”

In his call with analysts, Lacy reiterated that the Koch brothers would not demand any control despite their hefty investment.

“Their desire to be passive and not require a board seat,” along with the financial terms of their investment, “without a doubt” made the offer from the Koch brothers the most attractive financing support available for the merger, Lacy said.

Rich Battista, who has been Time Inc.’s president and chief executive for slightly more than a year, will leave the publisher after helping Meredith’s management with the transition, Time Inc. said.

Time Inc. Chairman John Fahey said in a statement that Battista and the rest of Time Inc.’s employees had made “significant progress transforming one of the world’s most iconic and historically significant publishing companies into a leading multi-platform media enterprise.”

But Fahey also said Meredith’s offer was “in the best interests of the company and its shareholders.”

Meredith’s stock shot up $6.55, or nearly 11%, to $67.55 a share Monday, and Time’s stock jumped $1.60, or 9.5%, to $18.50 a share, in response to the deal.

Like all traditional print publishers, both Time and Meredith have struggled to replace shrinking print ad revenue as more people consume news, videos and other information online. Time Inc., which was spun off from Time Warner Inc. in 2014, has been hard hit as more readers migrate to digital platforms.

In the first nine months of the year, Time Inc.’s revenue dropped 9% to $2 billion, compared with a year earlier. The company previously had held merger talks with Meredith to no avail, but the Koch brothers’ investment apparently helped get the deal done.

Tom Harty, Meredith’s president and chief operating officer, told analysts that the combined size of Meredith and Time was an advantage in gaining advertisers’ dollars.

“More and more marketers and agencies are consolidating budgets with partners who have the scale, trusted brands and ability to deliver [an] improved return on ad spend,” Harty said.

That’s one reason why media analyst Tuna Amobi of CFRA Research raised his rating on Meredith’s stock to “buy” from “hold” Monday and called the deal “transformative” for Meredith.

“Having so many assets in different areas of publishing gives them the ability to propose more solutions to advertisers,” Amobi said, adding that Time Inc. also is “farther along in terms of the online modernization of its content than Meredith.”

[email protected]

Twitter: @PeltzLATimes