Reed pays pounds 100m for legal publisher

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The Independent Online
Reed Elsevier, the information and publishing giant, yesterday announced solid interims and clinched a pounds 100m deal to buy Tolley, the specialist legal, regulatory and tax publisher, from United News & Media.

The acquisition, small next to the bid talk of recent weeks, disappointed some in the City, and the shares lost some of their froth, closing 5p down at 1,145p.

Speculation had centred on a mega-deal to buy Reuters or Bloomberg, the financial information companies, or even an approach to take over and break up Pearson, the media and publishing group that has been a favoured bid candidate.

John Mellon, Reed senior executive, said some of the rumours had stretched credulity. He added that the company was well placed to finance big acquisitions if opportunities arose, and that the US was likely to be the key target. However, organic growth would provide earnings momentum without more deals.

The results in the year to 30 June were roughly in line with expectations, with the scientific, professional and business operations all reporting higher operating profits. All told, pre-tax profits rose 12 per cent to pounds 416m, on revenues down 6 per cent to pounds 1.7bn. The professional division, which groups Reed Legal and Lexis-Nexis, was particularly strong, with operating profits ahead 19 per cent and margins rising by 1 percentage point to 25.4 per cent.

The travel division turned in a disappointing half, largely due to the decline in the market for Reed's traditional paper-based information. The company said it was accelerating efforts to introduce new electronic data products.

The rump of the consumer division, much of which has been sold off as part of a corporate restructuring announced last year, reported lower growth of about 8 per cent. Consumer books, which the company failed to sell at an acceptable price in an auction earlier this year, was "patchy", Mr Mellon conceded. "We intend to hold on to the company, turn it around, and sell it at a higher price when possible," he added.

The Tolley acquisition was a "perfect fit," Mark Armour, chief financial officer, said. "Their products complement those we already have, and will give us a good position in the market for legal and regulatory information for business."

The company had profits of pounds 4m last year, on revenues of pounds 17m. Analysts said the price, about 25 times operating profits, was very high, but conceded Reed could benefit from running it alongside Butterworth, its existing tax and legal specialist publishing operation.

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