Wednesday, June 25, 2008

Reed Business Sale Delay

The FT reports that Reed is delaying the circulation of information relating to the sale of their Reed Business unit in advance of finalizing a financing package that could be made availale to prospective buyers. The newspaper also establishes expectations that the unit could sell for $2.5Billion. From the article:
Another source close to the situation said that there is ”an irrational fear of a downturn in advertising revenues,” and there is a lot of advertising in the group. The source added, however, that Reed is still an attractive deal with senior leverage unlikely to be more than 3x EBITDA. Those low leverage levels should be enough to encourage bidders against a possible downturn in the economy, specifically advertising revenues, the source added. While Reed Elsevier is hoping to encourage a sale of the whole of RBI by offering a financing package to prospective buyers, it is also offering financing packages for parts of the business, one source said. The source said he thought that Reed would ultimately still sell the business as a whole despite marketing a sale of parts in tandem. This way, mid-sized players would also be in the process to drive up the end price for the asset, the source explained

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