Reed Elsevier offers pounds 280m for airlines guide: Inquiry likely into how announcement of deal was made to media before it appeared on Stock Exchange news service

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The Independent Online
REED Elsevier, the newly formed Anglo-Dutch publishing giant, plans to buy Official Airlines Guide, the US-based publisher of travel information, from the administrators of Maxwell Communication Corporation for about dollars 425m ( pounds 280m).

The proposed price is dollars 325m less than the figure paid by MCC in 1988, when its chairman, the late Robert Maxwell, targeted OAG as a key acquisition in his ill-fated plans to become a global media magnate.

An examination is expected into how the price-sensitive announcement was put out by the administrators, Price Waterhouse, before being posted through the official Stock Exchange news service yesterday.

It is the first significant deal for Reed Elsevier since it was created on 1 January by the merger of the businesses of Reed International and Elsevier. They each hold 50 per cent of Reed Elsevier.

After the repayment of dollars 210m of preference stock, the OAG sale proceeds would yield about 6 cents in the dollar to MCC creditors, who are owed dollars 3.2bn-dollars 3.6bn. That would leave PW one big asset to sell - the US-based Macmillan book publisher.

However, PW's Alan Jamieson said there was still a long way to go on the OAG deal. PW was still free to negotiate with other potential buyers. The letter of intent was 'non-binding and non-exclusive'.

Acadia Partners, backed by Robert M Bass, and K III, the leveraged buyout fund, are still interested in OAG or Macmillan or both. 'If other offers come in, we'll look at them,' Mr Jamieson said. 'But if not disturbed by a better bid, I would hope we could come to contract with Reed.'

The deal is subject to due diligence and also requires approval from the US Federal Trade Commission and the Department of Justice under Hart-Scott-Rodino anti-trust rules. They have 30 days to clear the deal, or block it, or demand further information.

The acquisition would further bolster Reed Elsevier's dominance of the travel information industry. Through Reed Travel, it owns ABC International, HTM International and Utell International. OAG is the main rival to its World Airways Guide. The deal would make Reed Elsevier overwhelmingly the biggest supplier of travel information in the world.

However, Jan Shawe, a spokeswoman for Reed Elsevier, commented: 'We would not have taken the deal this far if we considered that it (the monopoly aspect) was a problem.'

Reed International put in an offer for OAG in July 1988, but was outbid by MCC, which paid dollars 750m.

OAG (including nine months' contribution from the advertising information group Standard Rate and Data Service, which is earmarked for a separate sale) made net operating profits of dollars 44.5m in 1992, according to court documents. These also show that PW expects the US assets of MCC to fetch between dollars 680m and dollars 1.1bn for creditors.

The Stock Exchange is expected to look into how PW had begun faxing the OAG announcement to the media by 2.50pm when it did not appear on the Stock Exchange's RNS service, the official mouthpiece to the market, until 3.46pm. Mr Jamieson said the announcement was released in accordance with instructions from Reed.

Analysts welcomed the purchase. Reed International shares rose from 649p to 658p and 850,000 shares were traded during the day.

Reed Elsevier also announced plans to buy Editions Techniques, the biggest general legal publisher in France, with annual sales of Fr400m ( pounds 48m). The price was not disclosed.

The announcement was precipitated by a leak in France. Reed Elsevier has reached agreement with the Durieux family to buy a controlling stake in the company with the intention of later acquiring the rest of the shares.

The acquisition will be merged into the Butterworth's division of Reed Elsevier.

Reed Elsevier has comparatively few assets in France, although it has a conference organiser there, the advertising industry journal Strategies and joint ventures with the women's magazine Marie Claire.

It plans to pay cash for the two purchases. This is likely to double its net borrowings from the current pounds 350m. More acquisitions in Continental Europe are expected.