Family takes Reed Exec private

RECRUITMENT multi-millionaire Alec Reed finally gave up on the stock market by taking Reed Executive, the company he floated more than 30 years ago, private.

He has given his blessing to what amounts to a family-backed management buyout led by his son James. A new family vehicle, James Reed & Partners, has offered £62.6m or 140p a share.

That's 18% above Thursday's close. The stock climbed 18p to 136 1/2p. The shares have not traded at 140p since last summer, though the stock spent much of the previous three years at higher levels.

James Reed, the company's chief executive, said: 'This will remove the costs - both in time and money - of complying with increasingly complex rules of being a stock market company.'

He said maintaining a quote was costing the company £250,000 a year, a figure that would rise if it were to comply with Higgs Report demands of greater independent director representation on company boards.

Share buybacks have left the Reed family with 75% of the stock and after tallying shares controlled by employee trusts, the free float - the shares held by outside investors - is only 15%.

Ian Jermin, analyst at stockbroker RW Baird, said: 'After floating 30 years ago, the company never issued another share to raise money. You've got to question why they went public in the first place. It has increasingly been an anachronism.'

Reed Executive's sole independent director, Michael Eysenck, said: 'This offer gives shareholders the opportunity to realise their investment at a time when market sentiment towards smaller companies is increasingly competitive.'

Reed Executive is being plagued by the collapse in the permanent placement market, especially in the accountancy and financial market. Pre-tax profits for 2002 dived 43% to £8m on falling sales of £349m.

James Reed declined to comment on plans for Reed Health, another part of ther empire where the family owns 54% of the shares. His father has attracted strong criticism sacking two executives, a move that led to the resignation of three non-executives, including the chairman, Lord Tom Sawyer.

One analyst said of the news at Reed Executive: 'The bust-up at Reed Health and the continuing control of the Reed family make a mockery of Reed Health's demerger from Reed Executive. It is only a matter of time before Reed Health is taken private.'