Management intends to pursue only small-scale merger and acquisition activity within its five divisions over the next 12 months, according to two people familiar with the company’s plans, and has no plans to sell its Lexis-Nexis Legal & Professional business despite calls for its divestiture. Reed declined to comment.
A couple weeks ago I blogged that Reed Elsevier was under pressure from the investment to sell LexisNexis and that a likely buyer was Bloomberg. Though Davoudis’ reports not all analysts agree that LexisNexis should be sold, there’s still reason to believe it’s possible.
Lexis-Nexis has been singled out as a likely business for Reed to sell. Its competitive positioning has become a concern for investors amid claims that the division has suffered from under-investment as well as the continued weakness in the US legal publishing market. Lexis-Nexis is number two in a duopoly in the US after Thomson Reuters Westlaw. But the business, which returned to growth in the first half of 2011, saw a shift in the competitive landscape last summer when Bloomberg bought BNA, the legal and tax information group for $990m, marking the private company’s largest ever deal…….Morgan Stanley has identified Lexis-Nexis as the “key business for management to address” and has said in a research note that if Reed is to retain the business it needs to “explain the market positioning much more fully than it has done in the last couple of years.”
Add to this that Anthony Habgood, Reed’s chairman, had a “good reputation for disposals” of non-core assets in previous roles, according to Patrick Wellington, an analyst at Morgan Stanley. Joe Hodnicki at his Law Librarian Blog believes a sale of LexisNexis is unlikely based on a well reasoned analysis of legal publishing financial’s position in general.
I certainly have no crystal ball but I will be surprised if any major player in the legal publishing industry does anything more than make bolt-on acquisitions in 2012. If anything is likely to happen, my hunch is Lexis L&P [legal & professional] will bolt on ALM for its legal news properties and its specialist treatises. Why? Well, one reason might be L&P needs ALM’s specialist treatises to compete in the enhanced eBook market with TR [Thomson Reuters] Legal’s ProView-ing of its long neglected but now deemed valuable specialist treatises published by companies it acquired years ago.
Sale or not, there is a lot of uncertainty with the legal print publishing business. As I blogged yesterday, it may be possible that the legal publishing business, as we know it today, could go up in smoke.