Reed Business Information could be ripe for a private equity bid, after its parent company Reed Elsevier announced its intention to sell the largest B2B magazines division in the world last week.
In its statement last Thursday (21 February), Reed Elsevier did not address the method of sale, leading to speculation by analysts that a private equity bid could be in the pipeline.
The precise method by which RBI’s titles will be sold – either in one transaction or in parts – will be ‘the subject of review in the coming months”, the company said.
Stockbroker Bear Stearns said Reed’s ‘reluctance’to discuss a cash sale made a private equity arrangement a possibility.
In the frame
Prospective buyers could include Informa or Apax, which have respectively invested in Incisive and Emap in the past year. Other companies in the frame include Veronis Suhler Stevenson and competitors such as Nielsen and Springer. Analysts were confident that Reed Elsevier will find a buyer for RBI, but said that given the current credit crunch, the sale would not be completed until early 2009.
Analysts at ABN Amro said RBI could be subject to a public offering – the first sale of stock by a private company to the public – if sufficient interest was not forthcoming.
The sale is expected to raise between £1.4bn and £1.8bn for the company, according to analysts, but will be dependent on a number of factors – not least whether buyers will want to take on the entire portfolio and if they will be willing to do so without the exhibitions arm of the brands which Reed Elsevier said it wants to retain.
The sale will see Reed Elsevier move out away from the print publishing market as it distances itself from advertising-funded products to focus on subscription-based services and events, a strategy evidenced by its purchase of US data insurance specialist ChoicePoint for £2.3bn last week.
B2B UK publishing was worth £23bn in 2007, with print the dominant medium, generating £8.9bn in revenue or 46 per cent of total turnover.
In its 2007 end-of-year results, RBI posted a £119m operating profit, with like-for-like revenue up three per cent to £906m. Around 60 per cent of this revenue came from advertising and almost a third was made online.
The Reed Exhibitions business saw like-for-like revenues rise 12 per cent to £577m.