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Monday, February 25, 2008

Reed Elsevier Still Playing in Defence

I suspect we might be talking quite a lot about Reed in the coming months. The Guardian reports on the long drawn out sale process of the defence exhibitions. Reed put them on the block last year following a concerted campaign by some shareholders arguing that Reeds involvement in the defence industry was unethical - especially given its subtantial business in healthcare information.

Reed has intially expected to complete the sale of the defence assets before the end of 2007, but still no firm news.

The delay may be for a number of reasons. Reed insist that the completion of the deal is progressing so we can guess that either
a) Something has come up in due diligence that is compromising the offer price. If this is the case it is likely to be something to do with the exposure to security costs - especially for the London based DSEI event, or the legal complexity of the part ownership of the South American assets.
b) The buyer is a private equity firm that is trying to "back to back" the transaction with something else and the Reed deal has just got bogged down in someone elses transaction,

Whichever, or indeed whatever (if the answer to the delay is in neither of these hypotheses) Reed has little else it can do save sit tight. There won't be a long queue of potential buyers out there.

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