WH Smith, the British retailer and publisher that had been one of the few companies to actually acknoweldge making a preliminary bid for the AOL Time Warner Book Group, issued a brief statement last week saying that it would no longer pursue the deal. Smith said that while it and its financial partner, Cinven, earlier had expressed an interest in acquiring the publisher, "the preliminary discussions have now come to an end and neither WH Smith nor Cinven will be pursuing this further." Smith's withdrawal from the AOLTWBG sale process leaves it free to devote its resources to building its own U.S. publishing operation, in cooperation with Simon & Schuster (News, Feb. 17).
Smith's announcement followed remarks earlier in the week by Bertelsmann finance director Siefried Luther that suggested the company's interest in AOLTWBG is lukewarm at best. Following Bertelsmann's annual meeting, Luther told the Financial Times, "We have not decided in the board whether AOL Time Warner Books is a good investment or not," adding that any action regarding AOLTWBG would not occur until after Bertelsmann sells its Springer subsidiary.
The dual announcements, combined with business uncertainties caused by the Iraqi war, make it increasingly likely that Time Warner will not complete a deal for its book group as quickly as it had hoped, nor will it get a good price.