Friday, June 10, 2005

East Meets West as Legal Acquisitions in Europe Shore up Growth

Two announcements this week, one from Thomson and one from Wolters Kluwer, highlight these two legal aggregators' efforts to expand markets through acquisitions. In the instance of Thomson, it's an effort to expand in core Western European markets such as Germany, France and Italy to go toe-to-toe with Reed Elsevier's legal holdings. In the instance of Wolters Kluwer it's an acquisition of EON Programming, a Rumanian online legal database publisher. It's increasingly hard for aggregators to increase revenues with organic growth through deeper penetration of already saturated markets, so acquisitions seem to be the order of the day for these giants as they try to suck up every ounce of purchasable content to gain revenues. While the Thomson acquisitions come from a position of necessity in its battle for "all in one" service in legal with Reed Elsevier, Wolters Kluwer's seems to be more from a position of opportunity in Eastern European markets that have more long-term growth potential, assuming that the EU continues to expand. European margins for professional content are obviously more attractive than cutthroat North American markets these days, in spite of a wavering Euro. But there's a strong danger that the EU is going to succumb to globalization pressures in a rather messy way and force even nastier rationalizations in corporate purchasing budgets than those experienced in North American corporations. Relying on Western European largesse for short-term revenue bursts may be necessary to please shareholders for these companies, but these revenues need to be recycled into efforts to develop world-class business information services that can compete on their own in any global market. If you can make it in Romania - or China, or the U.S. for that matter - you can make it anywhere, they say.
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