Reed Elsevier Plans $455 Million Buyback as Disposals Continue

Reed Elsevier Plc (REL), the owner of the LexisNexis legal database, is continuing to sell units that don’t fit its growth strategy and is planning share buybacks to counter earnings dilution from such sales.

The Anglo-Dutch publisher said today it will spend a further 300 million pounds ($455 million) on buybacks this year in addition to 100 million pounds spent since the end of 2012. The value of planned disposals over the next 12 months may be roughly equal to the value of share buybacks in the period, Chief Executive Officer Erik Engstrom said in a phone interview.

“We’ve been disposing of significant print assets and we’re looking to transform the print business organically and migrate print assets to electronic solutions,” Engstrom said.

The company has been selling trade magazines and other businesses to focus on electronic data services and research offerings. London-based Reed Elsevier said today it expects to post growth in underlying revenue, profit and earnings in 2013, even as the market remains “mixed.”

The shares rose as much as 3 percent and were up 2.3 percent at 715 pence as of 9:09 a.m. in London.

“Reed is a top blue-chip play, benefitting from portfolio refocus on growth,” Steve Liechti, an analyst at Investec Securities, said in a note today. “Positive momentum should be sustained,” said Liechti, who recommends buying the stock.

Exhibitions Business

Operating profit in 2012, adjusted to exclude the effects of acquisitions, disposals and one-time occurrences, climbed to 1.71 billion pounds from 1.63 billion pounds, Reed Elsevier said today. Revenue rose 1.9 percent to 6.11 billion pounds, compared with the average analyst estimate of 6.17 billion pounds, according to data compiled by Bloomberg.

Engstrom said Reed Elsevier will continue to acquire smaller assets, which may include adding new events to its exhibitions business.

“We’re not looking at anything big,” he said. “Over the past three years’ average our total acquisition spend has been 300 million pounds a year.”

Last year, the company carried out 250 million pounds of share buybacks.

Reed Elsevier agreed last month to sell the screening division of its LexisNexis risk solutions business to Symphony Technology Group. The company also sold its Australian media business in January to private equity firm Catalyst Investment Managers Pty. In October, Reed sold entertainment trade magazine Variety to Internet entrepreneur Jay Penske.

To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net.

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net.

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