Montreal: In an unprecedented acquisition, Toronto-based children’s producer Nelvana (ntv) has announced an agreement to buy Palo Alto, Calif.-based branded instructional book publisher Klutz for $107 million (us$74 million).

A senior spokesperson for Nelvana says ‘the acquisition represents a very important stepping stone in our strategic growth plan’ in that Klutz’s distinct product line immediately gives the company a major Internet and e-commerce platform.

Nelvana will integrate Klutz’s 125-product line with Kids Can Press’ 300 titles in its reorganized branded consumer products division, which includes publishing and merchandising. Revenue from that division grew by 150% in ’99. Nelvana is currently distributing its ’99 annual report.

Klutz has reported year-over-year profitability for the past 22 years, including pretax profits of us$8.2 million ($12 million) in ’99 on top-line revenues of us$41.4 million ($60.5 million). The spokesperson says the acquisition increases Nelvana’s ebitda by 60%.

Klutz is a recognized pioneer in the packaging of instructional activity books for children aged six to 12. Since 1977, when it launched Juggling for the Complete Klutz, a book with three beanbags attached, Klutz has sold more than 50 million books and related products worldwide. Among its best-known titles are Cat’s Cradle, The Face Painting Book, The Nail Art Book and The Braids & Bows Book.

Klutz president and ceo John Cassidy will sign a multiyear employment agreement at closing, on or around May 1, and sit on Nelvana’s board.

In the transaction, Nelvana acquires 100% of Klutz’s stock for us$74 million ($107 million), approximately us$63 million ($92 million) in cash in addition to us$5 million ($7 million) in Nelvana subordinate voting shares and approximately us$6 million ($9 million) in subordinated notes payable to Klutz’s shareholders.

The deal is being financed through Nelvana’s existing facilities with Royal Bank and through proceeds of a private placement of subordinated convertible debt, which was completed April 10.

The company says it intends to go to the equity market in the second quarter of 2000.

Bear Stearns & Company acted as Nelvana’s financial advisor on the deal.