Reed Elsevier combines with Dutch rival to form pounds 19bn publisher
Tuesday 14 October 1997
Nigel Cope, City Correspondent, reports on a market where size is becoming increasingly important.
Reed-Elsevier is combining with Dutch rival Wolters Kluwer to form a group valued at pounds 19.4bn. Reed's chairman, Nigel Stapleton, said the new company, Elsevier Wolters Kluwer, would be the world's largest professional and scientific publishing group.
Though the deal will yield pounds 50m of annual cost savings after the first three years, Mr Stapleton denied that cost-cutting was the rationale for the merger. "This is about new technology and the need for scale. This is not a merger driven by cost-reduction," he said.
Mr Stapleton added that the combined group would continue to invest in the development of electronic material such as on-line information and CD-Rom products.
Analysts welcomed the deal, saying that in addition to the cost-savings, the product ranges of the two groups were complementary and it would eliminate a major competitor from the market.
Reed International's shares soared 97p to 629p, making them the day's best-performing blue-chip.
Louise Bardon of Henderson Crosthwaite said: "The businesses are complementary and it is a case of one plus one equals three. It eliminates a competitor in the law and tax sector and provides opportunities for creating new business."
She added: "The market is changing rapidly and becoming more concentrated on who can provide the content. This will give them more clout."
Anthony de Larrinaga of Panmure Gordon said: "This increases the pressure on the smaller scientific and legal publishers. Those who don't have the breadth and width of content will struggle."
The deal will need to be cleared by the European and US competition authorities but Mr Stapleton said he hoped to get clearance in early 1998.
The new company will have combined revenues of pounds 5bn and pro-forma profits of pounds 1.2bn. It will have a combined staff of 42,000 world-wide. It will retain headquarters in the UK and Holland. The UK and Dutch businesses will have identical boards of 10 executive directors. Cornelius Brakel of Wolters Kluwer will be chief executive with Mr Stapleton and Herman Bruggink of Elsevier as deputies. Mr Stapleton admitted such a large board would be a little unwieldy but said that was not necessarily a barrier to value creation.
Reed International and Elsevier Wolters Kluwer will maintain separate listings.
Under the terms of the merger Reed, Elsevier and Wolters shareholders will control 38.2 per cent, 34.2 per cent and 27.5 per cent of the enlarged company respectively.
Analysts said the deal did not necessarily make it more likely that Reed would sell its IPC consumer magazines division, which includes titles such as TV Times, Marie Claire and Loaded. Mr de Larrinaga said Reed would need to raise pounds 1bn for the division to make it earnings-neutral.
- 3 Daily Show's Jon Stewart destroys Fox News for its Ferguson coverage
Ashya King missing: Police hunt five-year-old boy with brain tumour snatched from Southampton hospital by his parents
YouTube video posted by Isis militants shows 'execution of 250 Syrian soldiers'
Daily Show's Jon Stewart destroys Fox News for its Ferguson coverage
Californian drought is so severe it's 'causing the ground to move'
Botched ice bucket challenge leaves man critically injured after plane drops hundreds of gallons of water
Exclusive: We share blame for creating 'jihad generation', says Muslim strategist
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
Do you realise just how foolish the UK looks?
Ukip Douglas Carswell defection: Tory MP jumps ship to join Nigel Farage
- < Previous
- Next >
iJobs Money & Business
£32000 - £38000 Per Annum Bonus, Life Insurance + Other Benefits: Clearwater P...
£400 - £500 per day: Orgtel: Test Manager - Banking - West Yorkshire - £400-£5...
£450 - £500 per day: Orgtel: SAS Developer, Chester, Banking, DI Studio, £450-...
£20000 - £30000 per annum + OTE £40 - £50K first year: SThree: SThree Group an...