Bidders line up for MCC publisher

K-III, the publishing arm of the buyout specialists Kohlberg Kravis Roberts, has emerged as a leading contender in what promises to be a keenly fought bid battle for Macmillan, the US arm of Maxwell Communication Corporation. A close contest could push the price up to more than dollars 1bn ( pounds 610m).

The group is headed by two former MCC directors, Bill Reilly and Harry McQuillen, and is one of the largest publishing houses in the US. It bought the Daily Racing Form from News Corporation when Rupert Murdoch's group was in trouble two years ago.

Publishing sources said Mr Reilly was 'desperate to get his hands on Macmillan', which he ran before MCC's takeover of the group in 1989. He lasted only a few months at MCC before resigning to build up K-III for KKR. Mr McQuillen was put in charge of Macmillan after Mr Reilly left, but he was poached shortly before MCC collapsed in 1991.

Other groups known to be interested in Macmillan include Simon & Schuster, the publishing arm of Paramount Pictures; General Cinema, which owns publishers Harcourt Brace Jovanovich; and the management, which has been approached by a number of venture capital funds.

Peter Davies, chief executive of Reed Elsevier, said the Anglo-Dutch publishing giant wants to buy Official Airline Guides, the US travel publishing group also owned by MCC.

Wall Street analysts say OAG could be worth dollars 400m. Macmillan, which cost MCC dollars 1.5bn, is estimated to be worth between dollars 600m and dollars 1bn.

Price Waterhouse, the administrators of MCC, put Macmillan up for sale last week, reversing its previous decision to float the business on the New York stock exchange.

The move comes after keen pressure from creditor banks, PW's continued rebuttal of approaches from a consortium led by the Texas billionaire Robert M Bass, who said it would pay dollars 725m for both Macmillan and OAG.

Mark Homan, who heads the PW team, dismissed the Bass offer as far too low, though the administrators have said they expect to receive between dollars 700m and dollars 1.1bn from the sale of Macmillan and OAG.

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