Reed Elsevier, the Anglo-Dutch publishing giant, yesterday unexpectedly shelved plans to sell its consumer books division, in the face of "low- ball" bidding from interested purchasers.
The decision, which helped send Reed's share price lower, was nonetheless applauded by some analysts, who said it proved the company would not be bullied into accepting an inferior price for the collection of publishers, including Secker & Warburg and Methuen.
The shares dropped to 1035p, down 28p on the day. There were fears that the decision could delay the company's push into higher margin publishing businesses, which is to be financed through disposals.
In a statement, the company said it expected "a significant improvement in trading performance," and that it remained the intention to sell the business in due course.
Poor trading conditions in book publishing generally, particularly following the collapse of the Net Book Agreement last year, had encouraged at least two serious bidders to offer far less than the pounds 200m Reed had been hoping to raise. Richard Branson's Virgin Group was believed to be willing to spend just pounds 80m. Among the other potential buyers was Electra, the venture capital company.
The deferral has dealt a blow to Reed's plans to divest of nearly all its consumer businesses, to focus on professional and electronic publishing. It has raised pounds 750m so far through the programme, which included the sale of its Dutch and UK newspaper businesses.
Reed Regional Newspapers were sold in November to KKR, the US leveraged buy-out specialists, for pounds 205m. Dagbladunie, the group's Dutch newspaper publishers, was sold to PCM Uitgevers for pounds 346m, while two smaller Dutch deals, along with the sale of the US consumer magazines to the media affiliate of KKR, raised another pounds 189m.
Reed conceded yesterday that the sale had been a "major distraction". It is is now planning to "renew efforts to return the business toward former levels of profitability" before offering the consumer books division for sale again.