The economic downturn is threatening the sale of Reed Business Information (RBI), parent firm Reed Elsevier reveals. In an update on trading, Reed says completion of a deal "cannot be certain", citing the worsening "economic and credit environment".
Shares in Reed lost 17% of their value in the past six months, hitting a year-low on October 10. Bid from prospective buyers -Bain Capital, TPG and Apollo - have dropped to between GBP650m (USD962.8m) and GBP700m (USD1bn), from GBP1.3bn (USD1.9bn) two months ago. Analysts estimate the UK publisher will have to have to settle for a figure below GBP1bn if it wants to clinch a deal.
"I should think GBP700m is the tipping point," says one analyst quoted by the Financial Times. "They must be getting close to pulling the sale. [CEO] Crispin Davis wants to go out on a high and his replacement wants to be left with a clean sheet."
Davis will retire at the end of December after 10 years as the CEO of Reed. The firm announced last week he will be replaced by Ian Smith, former CEO of construction firm Taylor Woodrow and General Healthcare Group.
Last month, Reed offered bidders GBP213m (USD315.6m) of loan financing to help conclude the sale, after two lending banks questioned their ability to finance the deal.
StrategyEye's related companies: Reed Business Information Limited, Bain Capital LLC, Reed Elsevier, Apollo Advisors, L.P.
