Reed Elsevier choice of CEO fuels merger gossip

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Ian Smith, the former chief executive of the housebuilder Taylor Woodrow, is to take the reins at Reed Elsevier, the publishing group said yesterday. The move came as a surprise to investors, who had expected the appointment of someone with a background in the industry.

Mr Smith left Taylor Woodrow last year after negotiating the builder's merger with its rival George Wimpey, and will succeed Sir Crispin Davis who is to retire as Reed's chief executive on 1 January. The job had been expected to go to an established publishing industry figure such as Andrew Prozes, who runs Reed's LexisNexis unit.

Prior to Taylor Woodrow, Mr Smith held senior management roles at companies including General Healthcare Group and the logistics business Exel, but he has never worked in the publishing sector or at a company specialising in the kind of digital information services on which Reed has latterly focused.

Gareth Thomas, an analyst at Collins Stewart, said Mr Smith's appointment would add to speculation that Reed Elsevier is contemplating some sort of restructuring. The publisher has already put its trade magazine business up for sale, though the financial crisis may result in it being offered less for the unit that it had hoped, and has also been persistently linked with a takeover of the Dutch publishing group Wolters Kluwer.

Mr Thomas said: "Given [Mr Smith's] actions at Taylor Woodrow and his lack of publishing background, his appointment might fuel the ever-present Reed Elsevier bid rumours."

However, Jan Hommen, Reed's chairman, said that the company had no shortage of people with industry experience. "Ian Smith is an outstanding business leader who will build on Reed Elsevier's strong foundations of global leadership," he said.

Analysts also pointed out that Reed has already answered some of the key questions about its future. The sale of its trade publishing business, which produces magazines including Variety and Estates Gazette, was announced shortly before Reed paid £2.1bn for ChoicePoint, a data provider to the insurance industry. An update on progress of the sell-off is due next week.

"Mr Smith will be a relative unknown to many investors," said Alex DeGroote, an analyst at Panmure Gordon. "[But] many of the more strategic decisions at Reed have already been taken."

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