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Being tarred as media annoys Reed chief


Sir Crispin Davis confessed to growing irritation at being tarred with the same brush as media groups exposed to weakening advertising budgets as Reed Elsevier’s chief executive unveiled resilient interim results.

“It’s wrong, frankly, to link us with television companies or newspaper companies or music companies,” he told the FT on Thursday, highlighting Reed’s subscription revenues from its online “workflow solutions” for the legal, medical, scientific and risk industries.

“I think it does hold back the share price,” he said.

Sir Crispin said the company had seen “strong buyer interest”, mostly from private equity groups, for Reed Business Information, the trade magazines business it put on the market in February. He held open the prospect of selling RBI in pieces, or to a consortium that could break it up.

Interest is understood to have come from one consortium led by Cinven and Candover and another fronted by Apollo. Bain Capital is also seen as having strong interest.

Analysts’ estimates of the likely proceeds range from £920m to £1.3bn, but one banker with knowledge of the process said the board would be unable to recommend any sale of less than £1bn.

Sir Crispin would not comment, but said that getting staple financing in place was “clearly a plus” for the auction. Prospective buyers have been told the staple finance package amounts to $1.26bn (£636m).

Reed reported flat net profit of £310m (£312m) for the six months to June, but this were skewed by last year’s disposal of the Harcourt education businesses. Pre-tax profit rose 14 per cent, from £308m to £350m, on sales up 10 per cent to £1.97bn.

Underlying revenue growth, excluding currency translation, was 6 per cent, while restructuring savings helped lift adjusted operating profit 11 per cent. Analysts welcomed news that the planned acquisition of Choicepoint was on track.

Sir Crispin said Reed’s clients’ spending did not fluctuate greatly, but predicted that slower growth in legal markets other than risk would shave growth at its LexisNexis division to 5 to 6 per cent this year.

The Elsevier science and medical division saw revenue growth of 3 per cent, hit by weakness in pharmaceutical advertising. Reed Exhibitions revenues rose 9 per cent. The shares closed up 32½p at 576½p





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