Euro Trade Merger Falls Apart

Article excerpt

The collapse of the $9 billion merger between Reed Elsevier P.L.C., the British-Dutch trade publishing giant, and its Dutch rival, Wolters Kluwer N.V., was all but inevitable, media analysts say.

"I was surprised when they announced they were getting together, but not when the government forced them apart," says Ed Fitzelle, managing director of New York City-based AdMedia Partners. "Two giants getting together is bound to cause some discomfort to competitors and consumers."

The merger would have created the world's largest trade publisher, with near-monopolies in the medical and legal segments. London-based Reed Elsevier, which owns the Lexis-Nexis database, is the parent company of Newton, Massachusetts-based Cahners Business Information (Variety, Publishers Weekly, Multichannel News). Wolters Kluwer owns the textbook publisher Little, Brown & Co. and CCH, a publisher of tax publications.

Under the merger agreement, Wolters Kluwer would have gotten only 27.5 percent of the new company, Reed would have gotten 38.3 percent, and Elsevier 34.2 percent. To maintain competition, European regulators wanted the companies to divest some of their legal, science and tax titles. Faced with a shrinking pie, Wolters pressed for a greater percentage, but Reed Elsevier refused to renegotiate and the deal fell apart.

Reed Elsevier co-chairman Nigel Stapleton told the European press that his company had not anticipated any regulatory objections. The company, he added, was not wounded by the turn of events. "Our strategic direction is clear and unaffected," he said in a statement.

Mixed report from analysts

Media analysts, however, were not as sanguine about the trade titan's financial future. The merger's collapse certainly wasn't a fatal blow to either company, but an independent Wolters Kluwer means increased competition in some of Reed Elsevier's markets and another potential bidder for acquisitions. …