Peter Davis looms larger than life in the recent history of Reed International PLC. First the 6-foot, 3-inch executive transformed the London-based company from an underperforming conglomerate to a highly focused publisher of books and specialty magazines such as Variety, Modern Bride, and New Scientist. Then he played a key role in negotiating Reed's 1993 merger with Elsevier, the venerable Dutch publisher of science textbooks and high-priced reference works. The result was Reed Elsevier PLC,
one of the world's 10 biggest publishing houses with $4.3 billion in revenues.
But Davis' strong drive for leadership also helps explain his surprise resignation on June 27. At the time of the merger, Davis had been promised the sole chairmanship when his Dutch co-chairman, Pierre Vinken of Elsevier, retires in 1995. Instead, after months of heated discussion, the board in June decided that Reed Elsevier should be managed collectively by a four-person executive committee, half Dutch and half British. Davis and another executive would oversee strategy and corporate communications, while the committee's two other members would supervise day-to-day operations.
That meant the 52-year-old Davis wouldn't get the chance to run his own show. "There wasn't blood on the carpet," he maintains. "It was more of a feeling that I didn't want to keep living like this." In the end, the more collective, Dutch way triumphed over the Anglo-American model of a single top executive. Ian Irvine, the Briton who has replaced Davis as co-chairman, concurs that Davis' belief in the need for a strong company leader didn't jibe with the "more collegial style" of the Dutch.
Davis' resignation comes at a crucial time, just as Reed Elsevier is pondering an even deeper plunge into the U.S. market, which already accounts for a third of revenues. The Anglo-Dutch company is considering one of two potential U.S. acquisitions: Ziff Communications Co., publisher of computer-industry magazines, which could cost some $2 billion, or Mead Corp.'s Lexis/Nexis information service, which is expected to sell for $1 billion. Reed Elsevier already paid $417 million last year for Official Airline Guides, the U.S. publisher of airline schedules. And it took a 49% interest in the American Booksellers Trade Exhibit & Convention, a trade-show company.
RISK-TAKER. Even with Davis gone, Reed Elsevier managers remain keenly interested in picking up Ziff or Lexis/Nexis. Yet Davis' zest for big-game hunting is one reason some analysts are relieved he moved on. They worried that Davis would not stop with a big acquisition such as Ziff, especially after the more conservative Vinken retired. "There was an element of risk for investors when Vinken left," says Alastair Smellie, a media analyst with Lehman Brothers Inc. in London. Sources close to the company also say there was a rift over Reed Elsevier's expansion into electronic publishing, with Davis arguing to push ahead more quickly.
The company, for its part, denies that disagreements over the company's strategy had anything to do with Davis' resignation. Says Irvine: "It was purely a personal decision." Whatever the case, Reed Elsevier can withstand a little executive-suite turmoil for now. With pretax profits up 30%, to $828 million last year, its immediate prospects look larger than life, with or without Davis. The big question is whether the Dutch approach to management will prove nimble enough to exploit the best prospects when they appear.