RBI Sale At Risk Of Falling Through As Bidding Price Drops To $1.7 billion

Reed Elsevier’s troubled attempt to sell-off its UK B2B division Reed Business Information appears to be in big trouble with the news that bids for the company since August have fallen about a half-billion dollars, according to Bloomberg. Two unidentified sources close to the deal told the news service the bids have dropped to about $1.7 billion (£97 million £1.08 billion) from $2.3 billion (£1.3 billion). The company has struggled to attract the financing needed to seal the deal since the sale was announced in February. Merrill Lynch analyst Paul Sullivan said in a note that the risk of the sale “being delayed or falling through has clearly increased”.
The markets were unimpressed and shares in Reed Elsevier (NYSE: RUK) dipped 6.4 percent to 468.25 pence at 1.34pm in London trading today, its lowest value since February 2004.

Three PE firms remain in the third round of bidding — Bain Capital LLC, Apollo Management and a combined group of TPG Inc and DLJ Merchant Banking — and seven banks are prepared to put in $900 million (£515 million) to finance the deal while Reed itself is set to put in about $330 million (£189 million). So it is still possible that a deal can be reached, but the finance shortfall, reportedly around $180 million (£102.6 million), must remain a problem at a time when banks are reluctant to invest or even lend big money.