Bain Capital, a US-based private equity fund, is leading the chase for Reed Business International, a unit of publisher Reed Elsevier that houses titles such as New Scientist, Variety and Estates Gazette.
According to reports, Bain Capital is favourite to win RBI, which has an expected value of approximately US$1bn, although Reed Elsevier management is understood to be unhappy with some conditions of the bid, including an earn-out structure that ties key personnel into the business in the long-term.
Reed Elsevier said in a trading statement in November that the process of divestment of RBI was at “an advanced stage although in the present economic and credit environment a satisfactory outcome cannot be certain”.
The publisher reiterated that discussions have progressed with a consortium of financing banks and repeated its willingness to provide financing for any successful bid itself.
In mid-November, Keith Jones was announced as new acting CEO for RBI, having previously held that position for Reed Business Information UK. Current CEO Gerard van de Aast announced at the same time his resignation from the position and departure from the boards of Reed Elsevier.
At 12.50am GMT today, Reed Elsevier’s shares were up 0.77% on yesterday’s close of 487.5p. In late December 2007, shares were trading at 692p.
In July, TMN announced that banks had agreed to provide £450m of debt, with a further £100m to come from Reed Elsevier.
The price tag is also significantly less than the US$1.8bn figure Anglo-Dutch publisher Reed Elsevier had launched its sales process with in February of this year.
TPG Capital, Bain’s strongest contender for RBI, has pulled out of the running. Private equity has shown the most interest in RBI, with Candover, Cinven, Advent International, Quadrangle and Providence Equity Partners involved in various stages of the bidding process.
Bain Capital has previous form in the publishing sector, having partnered with The Blackstone Group and Thomas H. Lee to buy US academic books business Houghton Mifflin from Vivendi for US$1.66bn in November 2002. Vivendi also took a hit on the sale, having purchased Houghton Mifflin for US$2.2bn in 2001.
By Robert Venes
Source: Thomson Merger News