Time Magazine cover
Meredith to buy Time Inc for about $1.8bn Getty Images

Meredith Corp is buying Time Inc for about $1.8bn (£1.35bn), a deal CEO Stephen Lacy called "a transformative and financially compelling growth opportunity" that joins two giant magazine companies.

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Meredith brings with it a magazine portfolio that includes Better Homes & Gardens, Family Circle, allrecipes and Shape, while Time Inc. owns properties including Time, Sports Illustrated, People, Fortune and Entertainment Weekly.

The companies said late of Sunday (27 November) the deal was unanimously approved by their boards of directors and will close early next year.

Meredith will pay $18.50 per share in cash for Time's nearly 100 million outstanding shares. It said it is using $3.55bn in financing commitments from a variety of lenders and a $650mn preferred equity from Koch Equity Development, an investment arm of Koch Industries, to finance the deal and pay down existing debt.

Prior to the announcement, Meredith had just $28m in cash on hand, according to its latest quarterly report.

Combined, the companies posted $4.8bn in revenue last year. Meredith expects it will save up to $500m in costs in the first two years of operation and plans to "aggressively pay down" debt by 2020.

Koch Equity Development will not have a seat on the board nor influence editorial operations, the company said.

Time chairman John Fahey said the sale was in the best interests of the company and its shareholders, noting the price represented a 46% premium to the closing price of shares on 15 November, the day prior to media reports about the deal.