NEWSLETTER ON SERIALS PRICING ISSUES

NO 50 -- September 25, 1992

Editor: Marcia Tuttle

ISSN: 1046-3410

CONTENTS

50.2 ELSEVIER AND REED TO MERGE THEIR BUSINESSES

50.3 COMMENTS ON THE ELSEVIER/REED MERGER

50.4 THE SECOND EUROPEAN SERIALS CONFERENCE , Fred Friend

Marcia Tuttle, tuttle@gibbs.oit.unc.edu, or Marcia_Tuttle@unc.edu.

Thanks to Kerry Kresse for calling to my attention a message on the SLA-PAM bulletin board and to Martha Tucker for permission to use her data. Tucker, of the Mathematics Research Library, University of Washington, Seattle, reported that her library had received notice from Faxon of price increases for two former Akademie Verlag (in former East Germany) journals that had been taken over by Gordon and Breach.

_Statistics_ (Zentralinstitut fur Mathematik und Mechanik (Akademie der Wissenschaften der DDR)) was formerly priced at DM 187.20 ($118.00); the new price for academic libraries is $690. Frequency stays the same.

_Optimization_ (Technische Hochschule Ilmenau. Sektion mathematik, Rechentechnik und Okonomische Kybernetik) increased from DM 280.80 ($177.00) to $1,300.00, with a frequency change from bimonthly to quarterly.

Martha says: "We received notice of these price increases on June 16, 1992 and must tell them whether or not we want to keep by June 22, 1992. The new rates are effective with the 1992 volumes. Can you believe this?"

50.2 ELSEVIER AND REED TO MERGE THEIR BUSINESSES

Press release on letterhead of Elsevier NV and Reid International PLC, dated 17th September, 1992.

Reed and Elsevier have agreed in principle to merge their businesses to create one of the world's largest publishing and information groups. Based on current share prices, the combined market capitalisation would be approximately L5.2 bullion/DFl 16.3 billion. The new group will have a strong international base with a substantial presence in scientific,professional, business and consumer markets.

- The businesses of the new group will be strongly represented in the world's principal markets of North America, Europe and the Asia Pacific region.

- The new group will have the financial and management strength to pursue the development of the full range of opportunities in its businesses.

- Significant benefits will arise from the integration of the two businesses, particularly from the combination of complementary US operations.

- Reed shareholders will benefit from Elsevier's growing scientific publishing business and strong European presence, and Elsevier shareholders will gain an interest in Reed's growing travel information and exhibi- tions businesses.

The proposed combination will create an Anglo-dutch group, with Elsevier and Reed each continuing as separate publicly quoted companies. The composition of the Boards of Reed and Elsevier will continue as now, with appropriate cross-representation.

The merger will be achieved on terms of equality without premium to either set of shareholders. Reed and Elsevier will each have 50 percent interests in the combined busineses and Reed will hold an approximate 11.5 percent interest in Elsevier in recognition of Reed's larger market capitalisation.

The principal operating company, to be known as Reed Elsevier, will be managed from the outset on an integrated and unified basis, with a Board comprised of directors from both patent companies.

Pierre Vinken will be Chairman of Reed Elsevier until his retirement in 1995. Peter Davis will be Chief Executive and Deputy Chairman and will become Chairman upon Pierre Vinken's retirement. Pierre Vinken and Peter Davis will both also be members of the Executive Committee of Reed Elsevier, which will be responsible for the management of the merged grou. The of ther members of the Executive Committee will be Ian Irvine and Loek van Vollenhoven. Nigel Stapleton will serve as Chief Financial Officer of Reed Elsevier and as a non-voting member of the Executive Committee.

Elsevier and Reed will enter into equalisation arrangements in order that one share of Elsevier will have equivalent economic benefits to 6.86 Reed shares. With effect from the 1993 financial year, both companies intend to pay equivalent dividends at the gross level based on this equalisation ratio. Had these arrangements been in force during the current year, Elsevier's dividend would have almost doubled.

Based on forecasts for the year ending 31st December, 1992, the new group would, on a pro forma basis, have revenues of L2,442 million/DFl 7,838 million and profit before tax of L424 million/DFl 1,360 million. The merger is expected to lead to enhanced earnings growth prospects for both companies' shareholders.

Following signing of a definitive agreement,, details of the proposed merger will be sent to Reed shareholders and made available to holders of Elsevier shares and Elsevier Bearer Depository Receipts. Ther merger will be submitted to both companies' shareholders at extraordinary general meetings, with a view ot the merger becoming effective on 1st January,1993.

The combined group will have a total of over 25,000 employees, of whom 11,000 are resident in the UK, 4,500 in The Netherlands and 7,500 in North America.

Commenting on the merger, Peter Davis, Chairman of Reed, said:

This is a very important move for both Reed and Elsevier. For Reed it achieves two of our key strategic aims, a much stronger presence in Europe and in subscription-based information publishing. I believe that this deal is good for both sides and builds on our considerable strengths. It will create a better base from which to grow, with real opportunities for the people working both in Elsevier and in Reed.

Pierre Vinken, Chairman of Elsevier, said:

Over the past decade, Elsevier has achieved world leadership in scientific information publishing. We now want to extend this success in other areas of publishing. Reed Elsevier will have not only the financial strength, but also the market position and technology necessary to achieve this and to meet the challenge of change in the global publishing industry.

[The press release goes on for 16 more pages to cover the background, commercial benefits, structure, financial information,and "general," along with profit and loss accounts of both companies and other financial data. The final appendix lists principal operations of both companies. Some of the better known Reed companies are Butterworth Heinemann, R.R. Bowker, Martindale-Hubbell, Who's Who?, World Airways Guide, Hotel & Travel Index, and IPC Magazines.]

50.3 COMMENTS ON THE ELSEVIER/REED MERGER

Comments submitted to the newsletter and SERIALST about the Elsevier/ Reed merger:

>From Edward Vielmetti

The best spin on the elsevier / reed merger was the sidebar about the president of Reed who drives a Bentley around.

If you don't think some people are making out good on scientific journals sold at high profit margins and with phenomenal renewal rates you're missing something...

>From E. Gaele Gillespie, University of Kansas, GGILLESP@UKANVM.BITNET:

The _Wall Street Journal_ article is most interesting, for example:

The immediate investor reaction was mixed....The market judged that the merger is a good thing for Reed and not such a good thing for Elsevier.... Analysts said Elsevier, which derives 60% of its profit from its 1,000 scientific titles, risks losing its attraction as a predictable, steadily profitable investment....Reed's publications are somewhat more dependent on advertiser revenue and thus the company's profit is more cyclical. 'Elsevier is merging with a company with much less good earnings quality,' said Tom Gietman (an analyst with the Amsterdam brokerage firm Van Meer James Capel N.V.).... (9/18/92 _Wall Street Journal_ article by Martin De Bois and Janet Guyon.) ------

>From Kent McKeever, Columbia University Law Library, mckeever@lawmail.law. columbia.edu:

The Friday issue of London newspaper, "The Independent" (page 24) reported that The UK based publishing conglomerate, Reed Publishing, has announced plans for a merger with Elsevier. The total value of the deal is close to 10 billion dollars. Most of your readers are familiar with the Elsevier group. Reed is most visible to me as a law librarian as the owner of the Butterworths companies, which are major law publishers throughout the Commonwealth and the US. Reed also owns Bowker, KG Saur, Martindale-Hubbell, and Macmillan Directories (Marquis). In the UK, Reed owns Heinemann, Busi- ness press, and a large consumer magazine chain, IPC. Shudder, shudder.

50.4 SECOND EUROPEAN SERIALS CONFERENCE

Fred Friend, Librarian, University College London, ucylfjf@ucl.ac.uk.

I thought readers of the Newsletter might welcome a brief report on the Second European Serials Conference, which was held in the Netherlands last week, organised jointly by the UK Serials Group and the newly-formed Dutch NVB Serials Group. As with the UK meetings the benefit lay in bringing together many key people from the library, publishing and subscription agent worlds. I am beginning to get used to this now, but perhaps your US readers do not realise the good effect the end of the Cold War has had in enabling people from Eastern Europe to attend and contribute very positively to such meetings. There were a crop of good papers (including one from Ward Shaw of CARL), but I think what remains uppermost in my mind after the conference is that all parties in the information chain now accept that changes are coming. Publishers are taking electronic publication seriously to the extent of putting money into trials. Subscription agents are moving into the document delivery business (at the Conference a link between Blackwell's and CARL was announced). And librarians are realising that the effect of all this has implications for them as well, apart from just publisher- or agent-bashing.

The NEWSLETTER ON SERIALS PRICING ISSUES (ISSN: 1046-3410) is published by the editor through the Office of Information Technology at the University of North Carolina at Chapel Hill, as news is available. Editor: Marcia Tuttle, Internet: tuttle@gibbs.oit.unc.edu; Paper mail: Serials Department, CB #3938 Davis Library, University of North Carolina at Chapel Hill, Chapel Hill NC 27599-3938; Telephone: 919 962-1067; FAX: 919 962-0484. Editorial Board: Deana Astle (Clemson University), Jerry Curtis (Springer Verlag New York), Janet Fisher (MIT Press), Charles Hamaker (Louisiana State Universi- ty), James Mouw (University of Chicago), and Heather Steele (Blackwell's Periodicals Division). The Newsletter is available on the Internet and Blackwell's CONNECT. EBSCO and Readmore Academic customers may receive the Newsletter in paper format from these companies. Back issues of the Newsletter are available electronically free of charge through electronic mail from the editor. To subscribe to the newsletter, send a message to LISTSERV@GIBBS.OIT.UNC.EDU saying SUBSCRIBE PRICES-L [YOUR NAME]. Be sure to send that message to the listserver and not to Prices-l. You must include your name. To unsubscribe (no name required in message), you must send the message from the e-mail address by which you are subscribed. If you have problems, please contact the editor.