Maid, the online information company, yesterday more than doubled its size when it snapped up Knight-Ridder Information for $420m (pounds 261m). As Cathy Newman reports, the move is likely to lead to around 300 redundancies, which represents 20 per cent of the combined workforce.
The newly merged company will start trading as The Dialog Corporation next month, and will be the biggest online information provider in the world with market share a 25 per cent market share, just ahead of Reed International's Lexis-Nexis subsidiary.
Dan Wagner, Maid's ebullient chief executive and founder, who will head up the new company, said yesterday that he was looking to make cost-savings of $35m by the end of next year. Mr Wagner said the cuts would involve some "human resource re-allocation".
Sources said 20 per cent of the 1,400 staff in the two businesses were likely to go as part of the streamlining.
KRI, which was sold by the US newspaper publishing giant, Knight-Ridder, owns more than 470 news and information databases. As part of the deal, Dialog has sealed a five-year contract to carry 27 of Knight-Ridder's daily newspapers. One City analyst said the new company's scale would turn Maid into an "immeasurably stronger company", as it would now have access to its own quality content instead of having to buy it in from competitors such as Reuters.
Mr Wagner, who said he had used "aggressive negotiating tactics" to secure the deal, said KRI's turnover had been fairly flat over the last few years because it had failed to target the "end-user", and had instead depended on the mature library market. "End-users" are individuals without training in information retrieval.
A number of KRI's "key executives" are to join Dialog, Maid said. These include Jeff Galt, KRI's president, who is to take the title of executive vice-president, and will report to Mr Wagner.
Maid said yesterday that a new executive incentive scheme would be introduced, but would not be finalised for some weeks. Mr Wagner's 18 per cent stake in the company will be diluted by about 35 per cent, but he said he had no intention of selling any of his shares.
KRI reported revenues of $289.8m last year, while Maid turned in a pre- tax loss of pounds 7m. However, Merrill Lynch has pencilled in pre-tax profits of pounds 30m in 1998 for the combined groups.
Investment column, page 27
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies