July 19 – July 26, 2007 Edition

Reed Elsevier Announces
Sale of Harcourt Education
To Houghton Mifflin Riverdeep

NEW YORK, NY/7/16/2007–Reed Elsevier today agreed to sell its Harcourt US Schools Education business to Houghton Mifflin Riverdeep Group for $4.0 billion, with $3.7 billion payable in cash and $0.3 billion payable in common stock of Houghton Mifflin Riverdeep Group.

On completion of the sale and the previously announced disposal of Harcourt Assessment and Harcourt Education International to Pearson plc, Reed Elsevier will have sold the whole of its Harcourt Education division for total gross proceeds of $4.95 billion, or 20.8x the value of its 2006 adjusted operating profit. The sale of the US Schools Education businesses is expected to complete by the first half of 2008 following US regulatory review.

Reed Elsevier announced its intention to sell its Harcourt Education division in February this year in order to sharpen its strategic focus on the growing digital opportunities in its Scientific & Medical, Legal and Business divisions. The sale of Harcourt Education will help create a more focused and cohesive business, well placed to deliver consistent adjusted earnings per share growth of a minimum of 10% annually at constant currencies.

The Harcourt Education division was largely acquired by Reed Elsevier in July 2001 as part of its acquisition of Harcourt General Inc which also brought Reed Elsevier a strong science journals business and a leading position in the growing health sciences market. The education businesses accounted for $2.1 billion of the consideration paid for Harcourt General Inc.

The Harcourt Education division reported 2006 total revenues of $1,637 million and adjusted operating profits, before the amortisation of acquired intangible assets, of $238 million, of which the Harcourt US Schools Education business contributed $1,113 million and $228 million respectively. The capital employed of the Harcourt Education division as at 31 December 2006 was $2,580 million, including goodwill and intangible assets, of which the US Schools Education business was $1,978 million, with gross assets of $2,174 million.

Commenting, Sir Crispin Davis, Chief Executive Officer of Reed Elsevier, said: “We are pleased to announce the sale of the Harcourt US Schools business at a price that recognises the exceptional quality of the Harcourt assets and of its management and staff.

“Following the sale, Reed Elsevier will be a sharper and more focused company. With our leading brands and authoritative content, we are well positioned to maximise the digital opportunities in our chosen markets.”

Harcourt Education is a global education company serving students and teachers in PreK through grade 12, adult learners, and readers of all ages. The company also publishes literature for adults and children and distinguished scholarly, professional, and reference works.

Harcourt had been a member of the Reed Elsevier Group plc, a world leading publisher and information provider. Reed Elsevier Group plc is owned equally by Reed Elsevier PLC (NYSE: RUK) and Reed Elsevier NV (NYSE: ENL).