Open Access News

News from the open access movement


Friday, March 27, 2009

Springer on the block

James Robinson, Academic publishing house Springer put up for sale in teeth of recession, The Guardian, March 26, 2009.  Excerpt:

The owners of Springer Science and Business Media, the academic publisher, are believed to be preparing the business for sale.

The decision to seek a buyer for the company, which turned over 880m (823m) in 2008, will test the City's appetite for large deals at a time when few are taking place.

Candover and Cinven, the private equity companies that own Springer, are believed to have appointed UBS and Goldman Sachs to sound out potential bidders. Prospective purchasers have until the end of next week to register their interest, according to sources.

If a sale goes ahead, it will be one of the biggest transactions in any sector so far this year. Sources close to the process say Springer could fetch up to 2bn from financial or trade buyers, although the credit crunch could make it difficult for potential bidders to meet that price. Springer is valued at 1.65bn by Candover, according to its website....

Rival private equity groups are regarded as the most likely buyers, although the head of one competing venture capital firm said he thought it was unlikely Springer would attract much interest, given the poor short-term prospects for the global economy.

[U]nlike other media groups, many of which are heavily reliant on advertising, Springer has a relatively secure source of revenue. It publishes more than 6,500 new book titles every year and owns 60 publishing houses in about 20 countries in Europe, Asia and North America....

Several attempts to sell publishing assets have failed in recent months. They include Reed Elsevier's planned disposal of its magazines arm Reed Business Information, which publishes titles including New Scientist. The offer was withdrawn in December after bidders failed to match its asking price.

CommentSpringer is the world's second largest TA journal publisher, after Elsevier.  But since buying BMC last October, it's also the world's largest OA publisher.  The fact that Springer's owners have been private equity companies didn't stop Springer from buying BMC, a profitable company which probably had lower profit margins than the rest of Springer.  That is, profit maximizing didn't squeeze out this form of diversification.  If that's a clue, then Springer could be bought by another private equity firm without adding anti-OA pressure to the new BMC division.  Could.  But while wise management will still want to prepare for an OA future, an area in which Springer now leads the other commercial giants, anyone who buys the company during an economic meltdown might have to think about slashing and divestments.  Springer's current CEO, Derk Haank, said that "open access publishing [is] a sustainable part of STM publishing, and not an ideological crusade."  But the new owner may want a new CEO.

UpdateReuters adds some new detail:

Candover and Cinven are mulling a sale of a 49 percent stake as one of several options to tackle high looming debt repayments the German academic publisher is unable to meet, a senior media banker said....

A tie-up with UK publishing and exhibitions group Informa or asset sales are other options.

The prospective sale is still in early stages, but could attract interest from private equity and trade buyers, two banking sources familiar with the matter said.

Springer approached Informa in 2006, but talks broke down after a few weeks. Analysts have said a tie-up would make sense....

Springer is facing a crunch on its existing 3.08 billion euro leveraged loan, which it is unable to refinance as markets have frozen up, the senior media banker said....

The sale of a stake could give Springer the financial firepower to strike a deal with banks that would allow it to keep its debt financing in place, the banker added.

Springer could offer to pay down some of its debt in return for banks agreeing to allow a new equity investor to step in....

Springer is performing well and the company was taking a proactive approach to its debt with more than two years to go before the repayment crunch, bankers said.

The company's leverage was described as 'not too awful' at 6-times to 7-times earnings before interest, tax, depreciation and amortisation (EBITDA), bankers said....