Lagardère's $537.5-million purchase of the Time Warner Book Group is the French media giant's most recent move to expand its book publishing business beyond Europe. That effort began in 2004 with the $400-million August purchase of the U.K.'s Hodder Headline and will likely continue with additional purchases in the U.S., although Time Warner Book Group chairman David Young said further acquisitions are a couple of years away. "We already have a lot to do," said Young, who will head Hachette Livre USA. Top priorities are finding a new location for the TWBG New York offices and agreeing on a new company name.

Lagadère, through its Hachette Livre book publishing arm, has almost no book presence in the U.S. In 2005, France accounted for the majority of its total book revenue of 1.64 billion euros ($2.1 billion). Its book units in France include Fayard, Grasset, Stock and Livre de Poche, and feature a mix of trade and educational publishers. Its main Spanish company is Anaya. The acquisition of Hodder Headline added 234.5 million euros in 2005 and helped to offset softness in Larousse and at Hachette Illustrated. In addition to its book operation, Lagardère is also a major magazine publisher and distribution company. It also holds a 15% stake in the high-tech company EADS, which it may now sell.

The TWBG purchase is not Lagardère's first experience in the American book market. It acquired Grolier in 1988 for $450 million, and sold it in 2000 to Scholastic. This time around, Lagardère's stay in the U.S. is likely to be more permanent. Media speculation has already brought up the possibility of the company eventually making a run at Simon & Schuster, a deal that could cost Lagardère $1 billion. Analysts believe it more likely that Lagardere would be interested in more modest-sized deals. And while Lagardère may do more shopping for trade houses in the U.S., analysts don't expect the TWBG purchase to spark a feeding frenzy for other trade companies. Although the purchase price was considered fair at roughly one times sales, the low valuation of TWBG reflects the slow growth nature of book publishing, an area where not many media companies are interested in investing. The last major trade publishing acquisition was the 1999 purchase of William Morrow by HarperCollins; HC paid $180 million for Morrow, which had estimated sales of $210 million.