Friday, March 07, 2008

Reed Business Information Sale

Various private equity firms are believed to be actively interested in the Reed Business Information group which was put on the block several weeks ago. If you recall Reed Elsevier announced the acquisition of Choicepoint at the same time. The list of firms interested includes Apax, Permira, Guardian Media, Candover, Cinven and Providence Equity Partners. According to several sources the sale price could exceed $2.obillion; however, this valuation may be too much for the debt markets to support. With several operating companies ruling themselves out, including United Business Media as the most notable, there are several interesting scenarios that may emerge.

Clearly one of the equity companies can buy the entire offering and at $2bill+ this would be an ideal outcome for Reed Elsevier. If the recent sale of EMAP's b2b division is anything to go by then the chances of a single buyer and a big price seems unlikely.

Apax and Guardian Media could combine an offer and seek to integrate the RBI titles into the existing businesses that each currently owns. When these companies agreed to buy the Emap titles there was some discussion of consolidation within the existing properties they own but they seem to have cooled to this strategy. Why that is may have something to do with the chance that they end up acquiring the RBI titles. Strategically Apax/GM could have significant repercussions because they would be in a position to collectively own the top 1 or 2 (or both) titles in numerous segments. They could subsequently discard any titles that don't fit that positioning and end up with a formidable trade publisher. Opportunities to consolidate across several market segments don't come up in bulk like this very often.

Reed Elsevier, in holding out for a high valuation, may also opt to retain an ownership position in one of the outcomes. If the scenario above holds up for example, Reed could end up owning 10% of a business with far better prospects than the trade business they already have and also get to pocket a lot of cash from the proceeds.

Once a deal is done (and my expectation is that there is no cherry picking to be had in advance of a sale), the acquirer will be looking to make some divestitures. Among the notable sales that could happen would be Variety which could gain a high price as a 'trophy' asset and the publishing titles Publisher's Weekly, LJ and SLJ. Bowker, Nielsen and several others would be interested in these titles so interest wouldn't be hard to find. New Scientist could also be considered a trophy title with Macmillan as a potential buyer.

Immediately after the announcement of the sale, there was some questions raised about the timing of the sale and whether anyone would be interested. It seems that these worries may have been pre-mature, but time will tell whether Reed Elsevier are as successful in selling these assets as they were selling their education division.

5 comments:

The Ops Mgr said...

It seems I am not the only one thinking about the RE/RB strategy for the divestment (http://divestmentwatch.blogspot.com/2008/03/speculation-on-buyers-of-rb-bits.html)

Interesting times!

Marty said...

And poof!

Out of nowhere Divestment Watch is gone.

I've been following OpsMgr blog abotu RBI's sale for over a month and out of nowhere his blog was yanked this morning.

Check it out. It's gone baby.

http://blogs.journalism.co.uk/editors/2008/05/12/rbi-divestment-watch-blog-closed/

Personanondata said...

I noticed that. I hope 'ops mgr' is doing OK. He can always post here so if you find him let me know or send him to me.
michael.cairns @ infomediapartners.com

Businesses for sale said...

I think Reed left this too long and tried to hold out for an unrealistic valuation. Greedy

The Ops Mgr said...

TheOpsMgr is doing well... moving on from RBI at the end of the month though - anyone need an IT mgr with an MBA with a sideline in blogging :-)

I look forward in watching the unfolding divestment drama from the sidelines though. It promises to be a saga!