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— Dealwatch —
 The sale of Reed Business Information seemed like a sure
thing. That proved to be a mistake, Richard Morgan wrote in a February retrospect. Here's how it went: Dec. 10: Reed Elsevier plc has halted its auction for its Reed Business Information unit amid the grim economic climate and will, for now, run it as a separate unit. Days earlier, the Independent reported Dec. 7 that Bain Capital LLC was close to a £1 billion deal for Reed Elsevier Group plc's Reed Business Information after TPG Capital walked away. However, the paper said, the outgoing Reel Elsevier chief invited Apollo Management LP to consider making an offer, even though it pulled out of the bidding in November. Nov. 17: Meanwhile, Gerard van de Aast is stepping down as the CEO of Reed Business Information. It looked like he might join a bid group for the unit. The Deal's Richard Morgan explained. Oct. 2: Strategics abandon RBI auction. The sale has stalled since second-round bids came in Sept. 18, given the credit crisis and the financing needed for price tag of up to $2.75 billion. What is surprising, though, is the exit of strategics, Morgan wrote. The development runs in contrast to the picture Sept. 5, as the auction looked to be gaining steam.
Aug. 13: Bids for Reed Business Information
came in the week of Aug. 11. The company was quite, but it didn't
necessarily indicate trouble, Morgan explained.
Meanwhile, Reed itself had taken significant measures to woo investors. First-round bids were expected to come in between $2 billion and $2.5 billion, Reuters reported July 21. Citing sources, Morgan pegged the valuation Aug. 13 between $2.25 and $2.75 billion. After making concessions earlier in the spring, the Anglo Dutch company again moved to sweeten the pot, willing to advance at least $200 million to the buyers. The financing help comes after (Concession #1) £750 million, or nearly $1.5 billion, in staple financing from a UBS-assembled syndicate has come up short given the current credit environment, and as (Concession #2) selling off the 400-magazine portfolio in pieces looks more and more likely. The idea to sell titles piecemeal made sense, a source told Morgan earlier in the year: 'especially since private equity prospects in the U.K. have been whispering in Reed Elsevier's ears they only want the U.K. or the European piece and, because of concerns of a recession over here, not the U.S. piece.' It was shaping up as a hard sell even before books went out. Apax Partners took itself out of the running in March, while strategics including United Business Media plc and Informa aren't thought to be interested, The Independent reported. The Deal's Auction Block database cites Candover Ltd., Providence Equity Partners Inc. and Cinven Ltd. among the other potential bidders for the unit. Reed Elsevier made a splash Feb. 21, unveiling plans to buy ChoicePoint Inc. for $4.1 billion to expand in the risk-management sector. But the more interesting story was the company's plans to sell RBI. At the time, the Times of London pointed out one possibility was Apax, which owns Incisive Media plc, which in July tacked on ALM Media Holdings Inc. for $630 million. Alongside Guardian Media Group plc, Apax in December picked up Emap plc's B2B titles in a deal worth nearly $2 billion. The Times piece also pointed to Providence, Cinven and Candover, as well as trade publisher Informa. RBI generated $1.8 billion in sales last year, Reed Elsevier said when it unveiled the auction. The ChoicePoint deal enables the London-based LexisNexis database owner to expand in the risk management. And with an RBI sale, the publisher is trying to get out of the more cyclical advertising-reliant business. RBI, formerly Cahners Business Information, comprises more than 80 B2B publications and 55+ Web sites and services. Reed Elsevier formed Cahners in 1998, topping off a six-month period in which the magazines unit nearly doubled in size from 85 to 133, according to a report. Cahners split in 2000 into three units publishing content focused on: manufacturing and electronics; media; and construction and retail. Reed Elsevier dropped the Cahners name in 2002. DITCHING SCHOOL Reed Elsevier recently got out of the education business, an area in which it had bulked up in a big way with its 2001 deal for Harcort General. (See more on that deal below.) The company put its Harcourt Education division on the block in February 2007, to instead focus on its digital media in its science, medical, legal and business divisions. In May, the publisher agreed to sell its testing and international ed business to Pearson plc for $950 million in cash. Reed Elsevier then in July agreed to sell its Harcourt U.S. ed business to Houghton Mifflin Riverdeep Group for $4 billion. The deals together were expected to return proceeds just shy of $5 billion, nearly 20.8 times adjusted operating profits for 2006, The Deal's Chris Nolter noted. At least one add-on, The Deal's Richard Morgan noted, was Saxon Publishers, which the Harcourt Achieve division of Reed Elsevier plc acquired for an amount thought to exceed $200 million. Saxon, he wrote, had long topped M&A wish lists industry-wide. Ahead of the Harcourt Education auction, which kicked off in February, Dutch publisher Wolters Kluwer NV was said to be eying Reed Elsevier for a takeover. The pair had entered talks back in 1998 but was told by regulators a tie-up would raise competition issues and abandoned the idea. THROUGH THE YEARS Reed Elsevier has had a steady stream of deals since buying Harcort in 2001. It has sold... Rounding out 2006, the company completed the restructuring of its North American operations with the sale of its Canadian manufacturing and industrial tradeshows to the Society of Manufacturing Engineers Inc. and Vance Publishing Corp. Reed Elsevier unveiled plans in May of 2006 to sell eight trade shows and one publication, all focused on plastics, packaging and other types of manufacturing, to Apprise Media Co. unit Canon Communications LLC. Total proceeds from the collective sales, Morgan noted, were $100 million.
...And it has bought. News of the completed restructuring came days after New York-based RBI said Dec. 4 it would acquire B2B online lead company BuyerZone.com Inc., of Watertown, Mass., enabling an exit for investors in the Watertown, Mass. company including Bessemer Venture Partners, Commonwealth Capital Ventures, BancBoston Ventures, Flagship Ventures and Women's Capital Growth Fund. (The publisher also has a VC arm, which kicked off 2008 participating in a $25 million E round for integration software developer Siperian Inc. In 2006, Reed Elsevier also offered up investments in online employment company Jobster Inc., online resource for small- and mid-sized businesses AllBusiness.com Inc. and Netli Inc., an applications delivery specialist.) Other acquisitions, many related to healthcare information, between 2003 and 2006 include:
STOCKING UP Reed Elsevier acquired Chestnut Hill, Mass.-based Harcourt General Inc. in 2001 through a $5.6 billion deal, paying $59 per share, beating out a $57 per share offer from TH Lee Partners, Bain Capital and Blackstone Group LP. The PE trio had also teamed together for a $1.65 billion deal for textbook publisher Houghton Mifflin Co. from Vivendi Universal SA. As it negotiated for Harcourt General, Reed Elsevier was at the same time shopping the target's higher education and corporate and professional services divisions to Toronto-based Thomson plc for $2.06 billion. So, as Peter Lauria wrote for The Deal at the time, simple math indicates Reed paid $3.45 billion for Harcourt's K-12 education business and its scientific, technical and medical groups. It was an affair to remember, he noted. Others concur. Of the Reed Elsevier-Harcort General deal, PricewaterhouseCooper's Mark Sirower wrote in February 2004, it succeeded: "largely because the acquirers explained to investors - carefully, honestly and succinctly - the rationales behind the transactions." Visit the complete Dealwatch Archive |
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