These reports estimate the potential value of the deal at between $1.85 billion and $2.32 billion.
A spokesperson for Gruner+Jahr, owned by German media conglomerate Bertelsmann, confirmed its involvement in the bidding process to Reuters. McGraw-Hill Cos. is also said to be among the bidders, in alliance with private equity firms Quadrangle and Advent International. McGraw-Hill declined to comment on its reported involvement.
Several other private equity firms have expressed interest, according to reports, including an alliance of two U.K.-based private equity firms, Cinven and Candover. U.S. investor groups Providence Equity Partners, Bain Capital and TPG Capital are also said to be interested.
UBS is coordinating the sale, and final bids are due in October, according to reports.
Reed Elsevier expects to complete the divesture in the second half of this year and use the proceeds to reduce debt.
Reed Elsevier is divesting RBI because its “advertising-based, fragmented markets increasingly differ from the rest of Reed Elsevier, [its] market growth profile and performance are less consistent” than continuing operations and the opportunities to create content-based work flow solutions—which the company sees as its future direction—are less clear, said Crispin Davis, CEO of Reed Elsevier, in a recent presentation.
Reed Phillips, managing partner of investment bank Desilva Phillips, said that while RBI is an attractive asset to buyers because of its size, it is also a complex international business.
Other reasons both strategic and private equity buyers would be interested in RBI include its well-known brands—including EDN, Furniture Today, Interior Design, Multichannel News, Variety and Reed Construction Data—and its relatively strong shift from a print- to an onlinecentric business model, Phillips added.
In an interim results presentation for the first half of 2008, CFO Mark Armour, noted that RBI’s online revenue grew to 34% of total revenue in the first six months of this year, up from 30% for the full year 2007.