Reed Elsevier’s (NYSE: RUK) 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-million 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) 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 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.