Publisher Reed Elsevier, Netherlands, has reportedly withdrawn the proposed sale of its trade magazine arm, Reed Business Information (RBI). The decision is seen to be a result of deteriorating trading conditions and the subsidiary's sharply reduced valuation. US buyout firm Bain Capital had been in talks for a deal earlier this week, while rival private equity group TPG recently pulled out of the bidding, quoting the investment as too risky.
According to media reports, indications of interest for RBI fell from £1.3 billion to £650 million and were heading lower. Negotiations are understood to have come unstuck over the deal's debt-to-equity balance as well as on price. The publisher had originally offered $330 million from its own accounts in vendor financing for the sale. Also, the company had reportedly put together a $1.26 billion staple financing package from a consortium of banks.
Proceeds from the sale were expected to pay debt following the group's £4.1 billion acquisition of ChoicePoint, a provider of information to the insurance industry, earlier this year. Reed expects to reconsider the divestiture in two-three years time, under more favourable economic conditions. The subsidiary's main titles include Variety and New Scientist.
