'Row over strategy' at Reed

A bust-up over "hundreds of millions of pounds" is said to have led to the resignation of Ian Smith at Ftse-100 media giant Reed Elsevier.

The City was shocked by Mr Smith's sudden departure two weeks ago after just eight months as chief executive. A source close to Mr Smith said: "He fell out with the chairman [Anthony Hapgood] as he believed the business was not in the shape the rest of the board thinks it is.

"I was told that Ian put a proposal to the board in September to invest quite substantial amounts – maybe hundreds of millions – and it disagreed."

However, an industry source said that there was not a huge difference in strategy between Mr Smith and Mr Hapgood, rather that the former was not the right man to lead the company through a recession.

In a separate blow to the company, chief technology officer Mark Popolano has resigned and will leave at the end of the year.

Reed, now led by Erik Engstrom, saw its shares close at 469p on Friday, up a penny on the start of the day's trading.