Publishing takeover
November 24, 2009
Informa confirmed on Tuesday that it is discussing acquiring Springer Science and Business Media from Candover and Cinven, saying it has been given access to due diligence materials in order to prepare a formal proposal.
"Combining Springer and Informa would bring together two highly respected and profitable academic publishers that would be positioned to take advantage of the opportunities in their core fields of Scientific, Technical and Medical (STM), and Humanities and Social Sciences (HSS), respectively," Informa said in a statement.
"On the right terms, an acquisition of Springer would be an important strategic step for lnforma and one that would be expected to generate significant value for Informa shareholders."
In May 2003, Cinven and Candover paid 1.05 billion euros ($1.5 billion) for Springer (then known as BertelsmannSpringer), the academic publishing arm of Germany's Bertelsmann. The new owners merged the German company with their Dutch group, Kluwer Academic Publishers, renaming the new entity Springer Science and Business Media.
Analysts concerned about financing
In April, Springer announced that it planned to sell up to 49 percent of the company in order to lower debt and fund acquisitions. The owners had been anticipating offers of 500 million euros. However, initial offers were closer to 400 million euros, with interested parties worried about refinancing the company's heavy debt burden.
Now, insiders say that the Berlin-based publisher may get better offers by selling the whole company or even a majority stake.
Informa's interest in the company comes as something as a role reversal: in 2006, Informa rejected a 2.7-billion-pound ($4.5 billion) takeover bid by Springer.
Upon confirmation of its interest, Informa's shares dropped by about 6 percent on Tuesday, reflecting market anxiety about how the company would finance the deal.
"We can see why this deal could make sense. However, we would be wary of the group overstretching itself financially and suspect investors may be reluctant to provide further funding," analysts from Altium Securities told Reuters news agency.
In its statement, Informa said "there can be no certainty agreement will be reached," and that a further announcement would be made in due course.
Reporter: Deanne Corbett
Editor: Sam Edmonds