Reed Elsevier to keep its business arm after rejecting bidders' demands

Reed Elsevier's attempts to offload its $1bn (£680m) business arm collapsed yesterday after its remaining suitor made an offer that was "impossible" to accept, insiders said.

Reed said it had "terminated discussions with potential bidders for Reed Business Information", bringing to a close a tortuous 10-month process.

The private equity group TPG pulled out last week, shortly after its rival Apollo walked away. Bain Capital was understood to be the most serious bidder for the division that publishes Variety and New Scientist. It had been expected to fetch more than $1bn.

The group blamed the deteriorating market conditions and the freezing of debt markets for its failure to sell the business. It said: "After discussions with short-listed bidders, the board judged it not possible to structure a transaction on acceptable terms". One banker with knowledge of the deal said: "The private equity guys kept adding more and more conditions until it became impossible for Reed to accept the offer."

Reed still wants to sell the business, which accounts for less than 10 per cent of operating profits, but said it would have to wait until market conditions improved. Sir Crispin Davis, the Reed chief executive, said: "While the short-term outlook for [the division] is challenging given the recent deterioration in economic outlook, we believe the business has significantly more value to our shareholders than could be realised in a transaction at this time."

Reed will manage the business information arm as a separate business within the group, overseen by the division's existing British manager, Keith Jones.

Reed said: "The business will be structured and managed so as to ensure that value is maximised over the period it remains in Reed Elsevier's ownership." Reed announced it was to divest the business arm in February, saying the model – based on advertising revenue and the cyclical nature of the market – did not fit with its strategy. The group is focusing on a more subscription-based model.

It announced it was in talks with bidders last month and that a consortium of banks including UBS and BNP Paribas, could provide financing.

Reed said the failure of the sale would not alter last month's forecasts of good revenue growth for Reed and "meaningful" margin achievement.

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