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Reed Elsevier to Acquire Matthew Bender for $1.65 Billion
Jim Milliot -- 5/4/98
Reed Elsevier has reached an agreement with Times Mirror to acquire the legal publisher Matthew Bender as well as the 50% stake in Shepard's that it d s not already own. Reed had been considered the likely buyer for Bender ever since Reed's merger with Wolters Kluwer was called off. In addition to being half owner of Shepard's, Reed has a licensing agreement with Bender to offer its publications through Reed's Lexis online service and to provide a significant portion of the Lexis case-law database through Bender's print and CD-ROM products.
The companies are placing the value of the deal at $1.65 billion. In 1997, Bender had sales of $192.9 million and earnings before interest, tax and exceptional items of $59.2 million. In the same period, Shepard's had sales of $67.9 million and earnings before interest and tax of $38.5 million. Reed said it will acquire Shepard's in a straight cash deal, while the cash purchase of Bender will be completed through a corporate reorganization in the form of a merger.

Paying a High Multiple

Reed is paying a multiple of more than 6.5 times Bender/Shepard's revenues, a price Reed group treasurer Paul Richardson defended by noting that Bender is a "high margin business" and that the price is about 20 times EBITDA. Richardson also told PW that while Reed had paid a high multiple for Lexis-Nexis, it "paid back in short order." In addition, Richardson said the acquisition of Bender will enhance Reed's Lexis service and will make the entire company a stronger competitor in the legal field, where it competes with Thomson/West and Wolters Kluwer.

Richardson said Reed expects to gain some operating efficiencies from Bender's back office operations, but said there is little overlap on the editorial side of operations. Reed must also decide on someone to head Bender once the acquisition is completed this summer since Kathryn Downing, who has been running Bender and Mosby, is expected to remain at Times Mirror.

Times Mirror, which expects to report a gain of $1 billion from the Bender sale, plans to announce the sale of Mosby in the second quarter.
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