Another Day, Another Krona

Karnov Group, the legal and professional information business based in Sweden, looked somewhat courageous and heroic when around the end of 2021, in one swoop, it agreed to buy significant legal publishing assets both from Thomson Reuters and Wolters Kluwer in Spain and France. Now with offices in Sweden, Denmark, Norway, France, Spain and Portugal, Karnov Group employs more than 1,200 people. The Spanish-French conquest helped to turn Karnov from a Nordic entity to a leading European one and, perhaps, set the scene for expansion of Napoleonic scale; that may yet be the plan.

After a short time, however, in May 2024, it was reported that a bid, for which competition clearance had been received, was made by existing shareholders, Greenoaks Capital Partners LLC and Long Path Partners, for an $833.3m takeover bid for all the shares in Karnov. The bid was unanimously recommended and supported by the board of Karnov but not, it seems, by at least 12% of Karnov Group stock owners, who publicly rejected the takeover approach, stating that the offer was too low. Blackmoor Investment Partners Ltd, a London-based company owning about 1% of Karnov’s shares, believed that the valuation offer did not reflect the company’s true potential. The opinion from Blackmoor was that “…it’s rare in Europe to have a software-oriented company of this quality and this competitive positioning. Most of them are listed in the United States and for a reason; their cashflows are valued much more highly there”. The view was shared by other investors, including England-based Janus Henderson, US-based Anabranch Capital Management LP and Sweden’s Didner & Gerge Fonder AB, which similarly rejected the cash offer. That effectively blocked the proposed buyout, given that the bidders must acquire more than 90% of Karnov shares for the bid to succeed. The Blackmoor and others’ argument was that they have high expectations that Karnov will continue to grow in its core markets and increase synergies from its acquisitions in Southern Europe. Further, it was added that peer multiples suggest a higher share price valuation. The would seem to be consistent with recent research, if it is to be believed, that the European legal publishing market is likely to grow substantially over the next several years The usual suspects, including Karnov, are cited as potential beneficiaries. The global legal and regulatory solutions segment is projected by Outsell to grow to $37bn by 2026.

Of course, little of this speaks to the intrinsic qualities of what Karnov does, its products, authors, staff, suppliers and customers; The Association of Danish Law Firms has certainly expressed its disappointment about the acquisition of Schultz (below). It is rather about the scale of the monetary returns which can be achieved by and for shareholders. No doubt these opinions and ambitions are legitimate but have probably little to do with the fundamentals of being in legal and professional publishing. Still, on the basis that every action has consequences, the position after any deal is done, if that were to have been the outcome, would almost certainly bring changes. Experience indicates that where money is the only motive for a change, something of real value will be lost. Or, maybe I am just deeply jealous not to be lucky enough to have a slice of what might have been $833.3m (or more).

It is difficult not to be a little disappointed when good law publishing businesses are used and passed around among the money-men, never finding the protection of metaphorical safe, responsible and loving homes and families. It seems different, and less appealing than the scenario in which smaller publishers are acquired and integrated into larger ones, giving the acquirees access to better funding, technology and expertise, albeit amid the inevitable dark, maybe Skandi-Noir aspects of integrations of that kind as well; perhaps, with occasional exceptions, such as Lexis Nexis’ (RELX) recent acquisition of Belgian-founded contract drafting company, Henchman, that era is simply over. Still, I look forward to seeing at least the occasional rising star, of which Karnov might still be one, as their acquisition, for up to 447m Swedish krona, of the IP rights to Denmark’s J.H. Schultz legal content, as well as related customer obligations would indicate,,c3999407, as well as vLex and one or two others expanding by way or merger and acquisition. They might even put their hedge fund, majority gambler-owned days behind them, perhaps as public, or better still, employee-owned companies.

However, a month or so after the bid was made, the investors in question decided to to withdraw their bid, causing Karnov’s share price to tumble. It would seem that no change might be Karnov’s status, for now. These things have a tendency, though, not to disappear, so it may be one for another day.

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