Reed Business Information Divestment: Nothing Ruled In Or Out
By Robert Andrews - Thu 21 Feb 2008 03:36 AM PST
Updated: RBI CEO Keith Jones’ email to staff (via Press Gazette): “At some point, we will have new owners – it’s far too soon to predict when this might be, or who our new owners will be – but I am sure there will be a lot of interest. RBI UK is in good shape for 2008. I hope I can count on your support as we embark on what I believe will be an exciting new era for RBI UK.” Jones said it was “business as usual” on producing content, launching new services and acquiring fast-growing companies. RBI’s bloggers have been reacting to the news here, here and here.
From the earnings call: Reed Elsevier’s (NYSE: RUK) decision to divest its Reed Business Information unit looks like it’s designed to protect against an ad recession. CEO Sir Crispin Davis talked up the company’s emergence in to online “workflow solutions” rather than publishing. “This business is more advertising-based, it is inherently more cyclical, it’s operating in lower-growth markets that are more print-orientated and where the workflow solutions opportunity is less clear.”
- Exhibitions: The exhibitions unit (which nestles alongside RBI in the Reed Business unit) won’t be sold. “Reed Exhibitions has been one of our consistently strongest business in recent years. We think that will continue - it’s highly cash-generative - so we just view this as a very attractive growth business.”
- Waiting to sell: And Davis isn’t in any hurry to sell RBI either. “It’s early days - we’re ruling nothing in and nothing out”. That includes an IPO for the unit. “We are very open and flexible on how we do this and also on timing.” The state of the markets may determine the timing of a sale. “We’re happy to (wait). We’ll do it in a way that maximises strategic value and we’re ready to be flexible on that score.” ”We’ll look at the method of divestment over the coming months ... it may involve a sale, it may not.”
- ChoicePoint costs: After buying risk management information provider ChoicePoint for $4.1 billion, Reed Elsevier reckons on £150 million in “cost synergies” by its third full year in the company. Savings will come from technology and IT, moving content on to LexisNexis’ platform and integration of data centres. They will completely integrate the business and locate in Atlanta. Regulatory approval will be required; expected to be granted “later this year”.
- Economy: Davis said, “when times are bad”, more people will be inclined to find insurance quotes via its ChoicePoint acquisition. “Touching wood”, Reed isn’t seeing economic impacts currently and “the more we move the business online and with workflow sols, the more resilient the business becomes”. There is some weakness in property- and construction-related exhibitions and impacts will begin to be felt if the economy gets worse.
- Restructuring: Reed’s own restructuring exercise is fixed on integrating the “mindset” and “culture” of its various units “toward one integrated company”. It will include reducing data hosting centres from 140 to around 30 and will cost £140 million this yea.
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