Monday, January 17, 2005

Springer IPO in 2005?

There have been rumors stirring for the past month about a possible Springer IPO in 2005. Yesterday's Sunday Times is the first story I've seen in the mainstream press that acknowledges the rumors. Considering that Springer is currently owned by two European private equity firms, Candover and Cinven, and that annual sales for Springer are somewhere in the ballpark of $1.1 - $1.2 billion, it is not surprising that the exit strategy will involve an IPO. There simply aren't many prospective bidders for a company that size, and the likely prospects would face antitrust concerns.

What is surprising to some is the talk of an IPO as soon as mid-2005. There is some speculation that Springer's top-line and bottom-line results have been better than expected and are driving the early IPO. Surely there have been some efficiency gains as a result of the merger of Springer and Kluwer Academic Publishing to help the bottom-line. But, it's hard to believe that sales growth could be so rosy when academic library budgets are under pressure. Granted, Springer has wisely focused on digitizing its collection of journals and books as quickly as possible and sales via the MetaPress platform are apparently quite healthy. Nonetheless, the primary driver behind the early IPO is more likely the desire by Candover and Cinven to cash out of their investment in Springer while they believe they can get their target rate of return and apply the proceeds to their next big deal.

Note that the Times article mentions the possibility of "bulking it (Springer) up by bolt-on acquisitions ahead of a float". Candover and Cinven have other media properties in their portfolios, such as MediMedia, which could bolster the appeal of Springer in the red-hot medical segment. Watch this space for developments on the Springer IPO.
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