Reed's newspaper arm sold for pounds 205m


Media Editor

The US buyout specialist Kohlberg Kravis Roberts has bought the regional newspaper division of Reed Elsevier, the Anglo-Dutch publishing giant, for pounds 205m.

The announcement capped two weeks of frantic negotiations involving as many as five bidders, and brought to pounds 685m, after tax, the amount Reed has raised from selling-off the bulk of its consumer businesses.

KKR is expected to find buyers for some of the group's newspapers, and will be working with the current management, led by Reed Regional's chief executive, Jim Brown.

Clifton Robbins, a KKR executive who has spent the past 10 days negotiating the deal, said yesterday that current management would get "a meaningful chunk" of equity. "The regional papers are doing quite well, and last year made record profits. Management is very bullish about the situation."

Last year, Reed Regional had operating profits of pounds 18m on turnover of pounds 142m. KKR will pay pounds 140m in cash, and issue an interest-bearing note for pounds 65m, repayable by January 1997.

Pru Ventures, the venture capital arm of Prudential insurance, had been considered a frontrunner, but ruled itself out when the sellers decided to hold a "contract race", offering a deal to the first bidder able to complete negotations.

The company also announced three transactions in the Netherlands and one in the US, and said that the divestment process, aimed at raising up to pounds 1bn, "was nearly complete". Dagbladunie, the group's Dutch newspaper publishers, will be sold to PCM Uitgevers for pounds 346m, while two smaller Dutch deals, along with last week's sale of the US consumer magazines to the media affiliate of KKR, will raise an additional pounds 189m.

The sell-off is aimed at repositioning the company as a publisher principally of business information. However, Reed Elsevier is keeping its IPC consumer magazine division.