Why Was Springer Nature's IPO Withdrawn? - The Scholarly Kitchen

"It was fascinating to watch the lead-up to last week’s efforts to debut Springer Nature on the stock market through an initial public offering (IPO). The prospectus was scrutinized not only by investors and competitors privately but also on Twitter by librarians and open access advocates (here are Bianca Kramer and Richard Menke) — and me. Here on The Kitchen, in a post positing that “Organizations with Subscriptions Are More Valuable,” Kent Anderson asserted “The ultimate share price for the Springer Nature IPO will help calibrate the value of subscriptions in our market, as well as the market’s opinion of the threat posed by APCs as non-recurring revenue trade-offs.” One commenter noted, “The Springer Nature IPO has been a long time coming and it will occur without any major problem.” And, on the morning of the planned IPO, Joe Esposito presciently asked, “Would you buy a stock if you thought it was going down?” Later that day, we learned that Springer Nature’s owners were withdrawing the IPO. What happened? What comes next?

It is clear that, for whatever reason, Springer Nature in its present configuration is viewed as less valuable by the market than it is by its current owners. This is why the offering was withdrawn. This helpful piece from Reuters reminds us, with an echo of Tolstoy, that “Like families, botched initial public offerings are all unhappy in their own way,” focusing in this case on debt and earnings figures.

In a smart analysis, David Worlock has emphasized that it is not so much a matter of “soft” European markets. Rather, he wonders if Springer Nature’s bankers marketed the offering without enough “allure” — positioning the offering as a publisher with its current business successes and challenges, rather than emphasizing the opportunity that it has to transform research and scholarship in the future.

I am left to wonder: Perhaps it is not just about marketing the offering but about the substance of the business.

Perhaps, whatever the strength of subscription businesses, the market rightly sees that model as tapped out for selling into academic libraries. Perhaps, as Michael Clarke has wondered on these pages, building on a term apparently earlier used by Jan Velterop, we have reached “peak subscription.” Perhaps, as Worlock writes, the market is coming to recognize that content is “getting commoditized and anyway you can get it free in Kazakhstan” and even more tellingly “that OA dilutes Ebitda” [Earnings before taxes, interest, depreciation and amortization]...."