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Blaming down global markets, London-based Reed Elsevier today said it has dropped discussions with potential bidders for Reed Business Information, its b-to-b publishing arm.

Earlier this week, private equity group Bain Capital was said to be the frontrunner in the auction after another private equity group, TPG, pulled out of the bidding. The bids were said to have fallen from approximately $2 billion to $1 billion.

"Whilst the short term outlook for RBI is challenging given the recent deterioration in economic outlook, we believe the business has significantly more value to our shareholders than could be realized in a transaction at this time," Elsevier CEO Sir Crispin Davis said in a statement.

A Reed spokesperson could not be immediately reached for comment.

Reed says it will reconsider a sale “in the medium term,” when market conditions become “more favorable.” In the meantime, RBI will be managed as a separate division within Reed Elsevier, the company said. RBI U.K. CEO Keith Jones, who stepped in as interim global CEO following the resignation of Gerard van de Aast, has been named CEO.

Reed announced plans to divest RBI—which publishes a number of trade magazines including Variety and Publishers Weekly—in February, citing a desire to exit the print-reliant industry. The auction has faced repeated hurdles since the tightening global credit markets reportedly caused one of the banks in the consortium put together by Reed to lend the eventual buyer more than $1 billion in staple financing backed out.

As of last month, Reed Elsevier was expected to extend the March 2009 deadline for refinancing half of the $4.17 billion loan it used to buy data provider ChoicePoint. The company had planned to pay off a portion of the debt with proceeds from its sale of RBI.

RBI makes up less than 10 percent of Reed Elsevier’s operating profits, the company said.

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