Springer Science + Business Media (www.springer.com) is not for sale, said CEO Derk Haank, speaking at the U.K. Serials Group (UKSG) conference this week in Torquay, U.K. The sale was recently reported in The Guardian and elsewhere. But it was categorically denied by Haank, who did, however, reveal that Springer's private-equity owners Candover and Cinven were in discussion with a third partner in order to provide additional investment.
"We are not for sale, there is no truth in Springer being sold," Haank said, in response to a question from the floor. He went on to say that in the face of possible future market consolidation, "the only thing being looked at is to involve a third partner." Haank emphasised that this third party would be in addition to-and not instead of-co-owners Candover and Cinven.
The Guardian reported last week (www.guardian.co.uk/media/2009/mar/26/publisher-springer-put-up-for-sale) that Candover and Cinven were seeking £2 billion (about $2.9 billion U.S.) for the publishing group. The report surprised many, given the difficulty of raising investment funds in the current economic climate. Had a sale taken place, it would have been one of the blockbusters of the year so far.
In a less-turbulent climate, Springer would likely be an attractive acquisition target, turning over €880 million (about $1.2 billion U.S.) in 2008. The company is the world's second largest publisher of STM journals, producing more than 1,700 journals and 5,500 new books every year. In January, the company published its 30,000th ebook. Springer's focus on providing journal subscriptions and associated services to a specialist audience of scientists and researchers means that the company is not heavily dependent on advertising, creating a relatively secure business model (especially when compared with advertising-reliant media companies for whom revenues have been plummeting). Add to this the fact that specialist scientific and medical content is not commoditized in the same way as news and business information, and it's likely that, in happier times, keen suitors would quickly have emerged.
However, as the recent failure of the attempted sale of Reed Business Information shows, there is little appetite for big media deals at the moment.
Speaking at UKSG, Haank revealed that, in his view, the future of science publishing would be one of incremental, rather than dramatic, change. "I don't think things will change that much-all the major changes have already happened," he noted, perhaps hoping to dampen speculation. "My conclusion is that we are in for a boring decade." Looking ahead to 2014, he foresees a world where technology will continue to improve but won't dominate developments in the sector. "I couldn't care less about Web 3.8 or whatever-the changes will be marginal compared to what we have already had."
After Springer's acquisition last year of open access publisher BioMed Central, Haank made it clear that, in his view, open access won't go away-but it won't take over either. In his opinion, the volume of articles published as open access is unlikely to increase to more than 10% of the total (compared to 3% at present).
So what's behind the rumors? Given Springer's private-equity backing, it is hardly surprising that a possible sale is entertained from time to time-it is, after all, the business model for private equity firms to buy, improve, and then sell businesses, typically in a 3-5 year time frame. And Candover and Cinven invested in Springer in 2003. (See the March/April 2008 issue of ONLINE magazine for an overview of private equity and the information industry.)
Having said that, Haank's reference to seeking a third investment partner in the event of market consolidation is interesting. In 2006, Springer was in negotiations to take over publishing group Informa (last year, a separate bid for Informa also collapsed). While it's true that technology has already driven a dramatic evolution in the delivery and application of scientific information, it's unlikely to end there. This particular sector will continue to live in interesting times.