Source: 30 to 40 Percent Chance RBI Deal Gets Done
Facing credit challenges, could big b-to-b company sell in pieces?
In the face of the global economic fallout over the last several months and the continued devaluation of print-centric media companies, what are the chances Reed Elsevier will be able to pull off the sale of its b-to-b publishing unit Reed Business Information?
Thatâs what I asked a knowledgeable M&A player today. His response: 30 to 40 percent, âif theyâre lucky.â
âIt will be interesting if a deal actually gets done,â the source, who wished to remain anonymous, said. âBig media deals are few and far between right now and will continue to be, at least through the next six months. In M&A, certain thingsâlike the number of bidders, price range and available financingâhave been predictable. They no longer are.â
Reedâs auction of RBIâa business the London-based media giant says is too dependent on print advertisingâhas faced steep challenges since at least one of the banks in a consortium put together by Reed to lend the eventual buyer more than $1 billion in staple financing backed out. Reed was recently said to be willing to âsignificantlyâ increase the amount of the financing package with the extra money coming from the companyâs own balance sheet.
The three bidders remaining in the third round are said to be Bain Capital, TPG and a partnership formed by Strauss Zelnick, a former non-executive director of Reed Elsevier.
âThe private equity firms continue to spend their money on due diligence,â the source said.
So, what happens if the auction falls apart? âI wouldnât be surprised if they try to sell it in pieces,â said the source, echoing previous speculation that the U.S. division of RBI will go separately from the European group. âReed doesnât want to keep that print exposure. But itâs challenging for a company that big to sell its businesses individually, too.â
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