Cinven, WHSmith unite for AOL book unit bid

The UK retailer has confirmed that it will bid alongside European buyout firm Cinven for AOL Time Warner’s US book unit.

UK book retailer and stationer WHSmith is to join forces with active European buyout firm Cinven in a bid for AOL Time Warner Book Group, the US-based book unit of the global media group.


In a statement to the London Stock Exchange yesterday, WHSmith said that it was planning to combine the unit, which incorporates Little, Brown Co. and Warner Books, with its own publishing business, Hodder Headline, to create what it described as “one of the leading transatlantic publishers.”


The deal is part of the plans announced by AOL Time Warner to generate up to $4bn from asset sales this year, following the $98bn writedown announced by the group last year. The company came close to completing the sale of the unit to both Random House and News Corp, but neither bid could be concluded as the parties were unable to agree on price.


WHSmith and Cinven have so far declined to comment on the size of their offer for the unit, although Reuters reports that first round offers for the business are likely to be in the $250m to $400m range. According to WHSmith, Cinven will be the sole provider of equity capital to fund the acquisition.


Alongside Candover, Cinven has recently been building a presence for itself in the European publishing industry, a notably active sector for private equity firms during the last twelve months. The two firms acquired Wolters Kluwer’s academic publishing business last October for E600m and are currently in the latter stages of the bidding for Bertelsmann Springer, the science and business publishing unit of Bertelsmann.


Last November, Thomas H Lee and Bain Capital acquired the US publishing activities of Vivendi Universal in a $1.6bn deal. French publisher Lagardère, backed by US private equity firm Ripplewood Holdings, also acquired the company’s European publishing unit. Last April, Cinven, Carlyle and Apax led the E1.2bn acquisition of the Vivendi’s healthcare and business publishing division.


Other companies bidding for the AOL unit include Random House, Houghton Mifflin, Perseus, Zelnick-Media and Penguin. Merrill Lynch is coordinating the sale of the business as well as the Bertelsmann Springer auction.