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Reed agrees to buy Seisint

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In a transaction that speaks volumes about publishers' continued preference for acquiring data and technology companies rather than traditional media properties, Reed Elsevier in July announced plans to buy Boca Raton, Fla.-based Seisint for $775 million.

Seisint provides risk management companies with online access to public records, as well as analysis, and Reed Elsevier saw it as a perfect complement to its LexisNexis Risk Management Group.

"The acquisition of Seisint reinforces our ongoing commitment to providing innovative and trusted data solutions for fraud prevention, identity authentication, risk scoring and asset recovery," said Jim Peck, senior VP-COO of LexisNexis Risk Management Group. "For a long time, we have been aware of Seisint, from the quality of its products to the potential fit with LexisNexis. We're very excited about the opportunity to serve our customers in a way both companies could not do independently."

Even before the 9/11 attacks, the risk management sector was growing rapidly. Today, it generates $5 billion in revenues annually and has grown 7% to 9% per year over the past decade, according to Reed Elsevier. "I have seen current figures that say the risk management industry is currently growing at more than 25% yearly," said Richard Mead, managing director of media investment bank Jordan Edmiston Group. "Reed clearly bought a good business with even greater prospects."

Once the Seisint deal is finalized-it must first pass U.S. regulatory review-the company will be integrated within the LexisNexis Risk Management Group. Reed estimates its combined revenue in the risk solutions sector will total approximately $300 million per year.

The real prize might not be the risk management data and expertise but rather the data mining and presentation technology behind it, Mead said. "In talking with executives at Reed, they believe they can apply the technology to dig through huge amounts of data throughout the company," he said. "And having greater access and control over data gives them greater expertise in all the vertical markets their publications and other properties serve."

The Seisint deal is part of a major trend under way in the traditional publishing world. "People often make the mistake of looking at major media companies such as Reed Elsevier and VNU as being advertising-driven businesses," Mead said. "I may sound like I'm beating a drum, but the truth is that they're becoming increasingly more focused on providing proprietary data in the industries they cover. They're changing their business models very quickly even though they're not fundamentally changing their role of providing relevant, useful information."

Larry Grimes, president of media bank W.B. Grimes & Co., said Reed's acquisition of Seisint illustrates one reason why advertising dollars won't completely come back to print publications as they did after past downturns. "Advertisers want to be part of the data dissemination, however those products reach users," Grimes said. "They want the daily, targeted presence that traditional media just don't deliver."

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