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Friday, May 09, 2008

To Be Sold or Not to Be Sold. In B2B that is the Question

Peter Kirwan thinks Bernard Gray was beeing "cheeky" in postulating that RBI might not get sold. Grays business, TES, is backed by Charterhouse, one of the supposed bidders and therefore Gray is simply talking down the price in the interests of his owners he argues.

Maybe. The piece goes on to expose the opportunities for a buyer which are interesting. He rightly argues that there is plenty of cost to take out. Certainly most PE owners would consider that RBI has too much management rather than too little. But firing the COO would cost at least half a million alone!

The article also points out that the absence of trade shows creates an opportunity for a new owner to launch some. I think this is less compelling. Firstly the trade show market is very crowded and it is not easy to find new niches of any scale. Secondly although Reed Elsevier owns Reed Exhibitions this has ever prevented RBI from lanuching and running shows and conferences. It fact it does run some. It owns Salon International and SED for example.

In many of its core b2b markets REC owns the leading show- Hotelympia in the catering sector for example) so I would presume that Reed would require some kind of restrictive covenant on competing from a new owner of RBI.

As we have said before the problem for Reed is that the magazine business is unattractive and the liabilities on employment contracts and pensions are onerous. Gray may or may not be being disingenous, but he is right to say a deal is by no means certain.

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