The Bookseller.com

13th October 2008

BARBARA CASASSUS

Barbara Casassus in The Bookseller's French correspondent.

A new European powerhouse?

06.05.08

The €2bn (£1.57bn) book publishing giant created by the merger of Spain's Planeta and France's Editis will attempt to break into the English--language market once the takeover has been digested.

In a ranking of global publishers, the deal will take the combined group to just outside the top five, competing for sixth position with Hachette Livre. Significantly, it will be the only group in the top 10 not to have either a UK or US presence.

In an interview with the French daily newspaper Le Figaro, José Manuel Lara, president of the family-owned Grupo Planeta, said that the combination of the two would "be stronger to tackle the Anglo-Saxon market, even if it remains very difficult to penetrate". Editis chairman and c.e.o. Alain Kouck backed the plan, saying the deal would "enable us to build a new European publishing leader and ensure that Editis can expand outside the French-speaking world". He told The Bookseller: "Publishers reaching a certain size cannot grow [by acquisition] within their national borders without the risk of violating anti-trust laws."

French investment group Wendel, which is selling the French publisher after just four years, said Editis -needed additional investment to continue growing: "There is enormous consolidation under way and Editis needs considerable investment for the years ahead. We have helped it develop into a leader in France, and believe that the merger with Planeta will -enable it to become a major international player."

Planeta is little known outside of continental Europe. Based in Barcelona—when first contacted it said it wanted to conduct the interview in Catalan—the business was founded by Lara's father in 1949 and generates 70% of its €1bn (£785m) in annual book sales from Spain, 20% from Latin America and the remaining 10% from Portugal and Italy. Including its wider media activities, it generates €2.5bn (£1.96bn) in annual sales.

Lara is a Francophile, having been French-educated in Barcelona during the reign of General Franco. "Our group, which had a tie-up with Larousse for years, always wanted to develop in France," he said. The company had talks with publishers Presses de la Renaissance (before the latter merged with Belfond) and with Presse de la Cité before it was bought by Editis, he said. It also looked at Editis before it was taken over by Wendel four years ago.

Nevertheless, some French commentators lamented the fact that the publisher of Général de Gaulle's memoirs, Plon, would become Spanish-owned, and one report suggested that French president Nicolas Sarkozy was following developments closely. But Lara said that "sceptics should be reassured, (because) for us Editis must remain French". Its teams would remain in place, and there would be no lay-offs linked to the acquisition, he added.

"There are many examples of publishers that belong to foreign groups and remain national, both by language and special characteristics," Kouck said. "We own Belgium's leading publisher De Boeck, Hachette Livre owns Anaya in Spain, and everyone finds that normal," he added.

Wendel had a choice between the Spanish group and France's Média-Participations, whose core business is comics. The unsuccessful candidate claimed it was delayed access to Editis' books, so did not have enough time to put together a detailed bid. But Wendel denied the allegations. "Média-Participations expressed an interest in Editis very late in the day," a spokesperson said.

"We are disappointed, but life goes on, and we have other, smaller acquisitions in mind," a Média-Participations official said. Books represented just over two-thirds of last year's MP sales of €303m (£238m). Editis and Média-Participations have complementary sectors of publishing, and a "culture of autonomy, promoting brands rather than parent companies", the official added. "We could also have pooled resources in digitisation, production and distribution, and believe we could have built a French--speaking publishing champion together. The fact we drew up a financial package very quickly gives credence to our plan."

Wendel should make a capital gain of about €320m (£251m) on the €1bn (£785m) deal. Although the sale came as no surprise, sources noted that when Wendel aquired Editis in 2004, supervisory board chairman Ernest-Antoine Seillière said it would keep the publisher for 10 to 15 years. "Instead, it has walked away after four years with a handsome profit," said one source.

"No one could know in 2004 how difficult the publishing market would become," Wendel said in response. It denies reports that it opted for Planeta under pressure. "There was no ultimatum," the spokesperson said. "We accepted Planeta's offer, because it has a real project, with a sound, long-term vision and an uncontested leadership. The offer has been welcomed by the whole of the French publishing industry."

The World's Leading Publishers (2007 Revenue)
£3.7bn Thomson
£3.5bn Pearson
£3.5bn Bertelsmann*
£3bn Reed Elsevier
£2.7bn Wolters Kluwer
£1.7bn Hachette Livre
£1.6bn Planeta + Editis

* Includes sales from the book club division, Direct Group
All figures quoted at current exchange rates

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