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With Gallimard as Sole Suitor, Flammarion Questions Sale

By Olivia Snaije

PARIS: Since the beleaguered Italian company, RCS Mediagroup announced last March that it was selling Flammarion for 300 million euros (it has since lowered the price to 250 million); the French publishing world has been aflutter with the Who, What and When.

The independent Gallimard was one of the first bidders, Albin Michel and Actes Sud formed a partnership (which quickly disintegrated) and joined in, Albin Michel then teamed up with Chequers Capital, a French investment fund and made another bid. As of last Monday, the news broke that Albin Michel/Chequers Capital had withdrawn their offer, which they had refused to increase, with Gallimard remaining the sole buyer.

Alain Beuve-Méry, a journalist at Le Monde newspaper who closely follows the publishing industry is doubtful anyone will get Flammarion — or at least not right away.

“I’m not so sure RCS will sell Flammarion because it’s obvious that the offers that were made were not high enough,” said Beuve-Méry.

RCS’s board, which lacks a CEO, meets this Friday and in all likelihood will appoint Pietro Scott Jovane, head of the Italian unit of Microsoft, who may decide to further delay the sale since the parties involved have not come to a financial agreement.

“Gallimard’s interest in growth, like Albin Michel’s, is linked to the changes in the publishing world with the evolution and weight that e-books carry. In order to adapt to this change, it’s not a bad thing to expand.”

Should Gallimard’s offer be accepted, Beuve-Méry said, the two companies’ catalogues are fairly complementary. Flammarion would bring a whole element of popular literature to the highbrow Gallimard, as well as books on political and social sciences, art books and the very lucrative Casterman imprint, publisher of Tintin.

The less positive aspect of the deal for Gallimard would be a surplus of paperback “collections” and imprints, of number of which are owned by both companies. Their distribution centers are geographically far apart, which would be problematic as well. Flammarion’s distribution set-up was what interested Albin Michel, which currently uses Hachette Livre as a distributor, noted Beuve-Méry, but it is far less interesting to Gallimard.

He believes that Albin Michel dropped out of the running purely for financial reasons. “Industry professionals say that Flammarion is not worth 250 million euros, and perhaps [Albin Michel owner] Francis Esmenard at age 75 didn’t feel like launching into something this big.”

Offers have been at around 200 million euros, said Beuve-Méry, which would send a signal to banks that RCS is trying to gain a foothold on their debt, but at the same time the company would be losing a profitable asset.

“The fact is that Flammarion is a profitable, well-run company,” said Beuve-Méry.

“Under the Italians it was restructured well and [Flammarion CEO] Teresa Cremisi has done a really good job managing it. The Italians might realize that they have something good going with Flammarion.”

DISCUSS: Is Publishing Consolidation Favorable to Tech Takeover?

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