On Jan. 15, 2015, there was a disruption in the field of academic scientific publishing. The privately held Holtzbrinck Publishing Group and private equity firm BC Partners (BCP) announced a proposed merger of the majority of Macmillan Science and Education with all of Springer Science+Business Media, including BioMed Central, SpringerOpen, Adis, and Apress.
Included in the deal, from the Macmillan side, are Nature Publishing Group (Nature and Scientific American), Palgrave Macmillan, and Macmillan Education. Excluded is Macmillan Publishers and J.B. Metzler; Macmillan’s higher education book imprints (Bedford/St Martin’s, W. H. Freeman & Co., and Worth Publishers); Holtzbrinck Ventures; Holtzbrinck Digital, Information and Services; Macmillan New Ventures; Digital Science; and Digital Education. If approved by regulatory bodies, which is expected in the first half of 2015, the new company will have 13,000 employees and sales of about €1.5 billion (about $1.7 billion U.S.).
The resulting company will be jointly controlled by Holtzbrinck, with a 53% share, and by funds advised by BCP for the remaining 47%. Derk Haank, currently Springer’s CEO, will be CEO, while Annette Thomas, currently Macmillan Science and Education’s CEO, will become chief science officer. Rounding out the management team will be Martin Mos as COO and Ulrich Vest as CFO. The supervisory board will be split evenly between representatives from Holtzbrinck and BCP: Stefan von Holtzbrinck (chairman of Holtzbrinck), Ewald Walgenbach (vice chairman of BCP), Michael Brockhaus and Jens Schwanewedel from Holtzbrinck, and Hans Haderer and Christian Mogge from BCP.
Holtzbrinck, still owned and managed by the Holtzbrinck family, bought 70% of Macmillan in 1997 and the remaining 30% in 1999. In the U.S., the Macmillan name was owned by Pearson until Holtzbrinck bought that in 2001. Springer has a more tangled ownership history. Private equity firms Candover and Cinven bought Springer from Bertlesmann, calling it Bertlesmann Springer, in 2003. It was renamed Springer Science+Business Media when Candover and Cinven merged it with Kluwer Academic Publishing in 2004, and it was sold to private equity firms EQT and GIC in 2009. BCP acquired it in 2013.
Merger Strengths and Weaknesses
The two sides in the deal each bring strengths and weaknesses. Running the publication numbers, Springer has a distinct edge. It publishes 2,987 journal titles compared to Macmillan’s 160. However, the prestige factor of Macmillan’s Nature, Scientific American, and Palgrave titles evens the scale. Springer also has a presence in the book publishing market, with more than 8,000 titles to its credit, and its SpringerLink platform is widely used in academic libraries.
Springer’s emphasis on open access (OA) may open up more of Macmillan, particularly in light of the investment Nature Publishing Group has with Swiss OA publisher Frontiers. The combined group is likely to pay great attention to opening up access to its publications, as this is a strong trend in STM publishing.
Not having Macmillan’s Digital Science included in the merger is interesting. This portfolio of companies, including Altmetric, BioRAFT, figshare, Labguru, ReadCube, and Symplectic, among others, is free to develop products outside the sphere of the combined company. Whether it will have unrestricted access to Macmillan’s Nature Publishing Group publications and gain access to Springer publications will be determined later.
Economies of Scale
Haank noted in the press release that, “The expected economies of scale will allow for additional investments in new product development.” Librarians are dubious about whether these economies of scale will lead to any savings on their subscription prices. Most expect to see price rises rather than declines. Haank’s emphasis on “breadth, volume and reach” is aimed more at solidifying a competitive position against other academic publishers than changing the situation for subscribing libraries. Charles Hamaker, associate university library collection development and electronic resources librarian at the University of North Carolina–Charlotte’s J. Murrey Atkins Library, thinks the two companies have very different work cultures and foresees a culture clash.
At the APE (Academic Publishing in Europe) 2015 conference, held in Berlin Jan. 20–21, Wim van der Stelt, Springer’s VP of publishing strategy, declined to say much about the proposed merger, stressing that it is not a done deal and that a name for the combined company has not yet been discussed. With such well-known brand names as Macmillan and Springer, it’s tempting to suggest a few possibilities to the new owners. How about MacSpringer? SpringNature?
APE 2015 delegates, however, felt free to ponder the effects of the merger for the academic publishing industry. They agreed that consolidation seemed inevitable and competition would continue to occur, not only among major publishers such as Elsevier, Kluwer, Taylor & Francis, Wiley, and the new Springer/Macmillan alliance, but also for acquiring publishing rights for learned society journals. They were also in general agreement that the deal structure, with Holtzbrinck having a majority interest, was vastly better than private equity ownership, giving the proposed merged company greater stability.
A Reuters news report quotes Walgenbach on the merger strategy: “The most likely exit will be an IPO. However, that is still at least 2–3 years away.” That would certainly fit with the private equity mentality, but it seems antithetical to Holtzbrinck’s attitude toward its acquisitions.
A Disturbance in the Force
The consolidation of these two quality publishers, described in the press release as “a strategic transaction by Holtzbrinck and BCP aimed at securing the long-term growth of both businesses,” should bring financial stability. As academic publishing searches for new business models, it’s clear that scale does matter.
What about a digital future? Although both Holtzbrinck and BCP have offices in Germany, Macmillan Science and Education and Springer have a significant presence in London. The development of London’s Tech City—where Macmillan Science and Education is headquartered—as a digital media hub could act as a catalyst for increased innovation in new product development. Certainly, having Thomas as chief science officer will drive the innovation and transformation needed to make this merger a success.