Under the all-share offer British Steel shareholders will get 62 per cent of the new company and Hoogovens shareholders will get 38 per cent.British Steel, which is in effect taking over the Dutch company, is paying Hoogovens shareholders a 15-20 per cent premium on the value of their existing shares. The new company will have its headquarters in London and be registered in the UK, and three of the five top executive directors will come from British Steel. The two joint chief executives will take it in turns to run the executive committee for two-year periods, after which both of them will retire.The impetus for the merger came from Mr van Duyne, who approached Mr Bryant in early January with a proposal to combine the two companies' construction steels businesses. The talks quickly developed into full- blown merger negotiations.Outlook, page 17.

REED INTERNATIONAL, the world's largest publisher by stock market value, came under fire from City analysts yesterday when it warned profits this year would fall below those of 1998, triggering a 6 per cent drop in its share price. The shares fell from 481p to 453.5p, wiping pounds 300m from its market value, when the group said cut-throat competition would dent profits at two of its key divisions - Lexis-Nexis, a legal database unit, and Cahners Business Information, a business-to-business publisher. A number of analysts expressed annoyance that the group had failed to clarify its profits outlook ten days ago, when the Dutch newspaper De Telegraf predicted a 10 per cent fall in profits in 1999.The newspaper reported on 28 May that the company was telling analysts at a meeting in New York of the depressed profits outlook, prompting a sharp fall in its share price.The Anglo-Dutch publisher, jointly owned by Reed International and Reed Elsevier of the Netherlands, then declined to comment except to deny an analyst's meeting had taken place. The share price recovered, only to fall again yesterday after the profits warning.Julien Roch, an analyst at Lehman Brothers, said: "This was badly handled because of the rumours in the Dutch press. It lowered the trust regarding the company."Louise Barton, an analyst at Investec Henderson Crosthwaite, said she was unhappy the company waited until yesterday to confirm the information. "What's happened is someone leaked what they were going to say at this presentation.

They should have actually come clean at the time of the rumours in the market the other day."Nigel Stapleton, executive chairman of Reed, said the group could not comment at the time of the report because key decisions affecting profits had not yet been taken.He said Reed had needed to consider whether to cut costs or continue investing in the two affected businesses. "We were not yet convinced that continuing with [developing the businesses] was the right thing to do. When one is ramping up our costs to the extent that we are, every management team would be expected to consider all options carefully before a decision is made."Reed said Lexis-Nexis failed to improve profits as hoped amid stiff price competition from its rivals in the US. Revenues at Cahners were hit by weaker-than-expected demand for advertising.. THE INVESTMENT banking group, Lazard Freres, said yesterday that it is to combine its operations in London, Paris and New York in order to compete more effectively for global business The change will take place over the next six to nine months. The 150-year-old firm, controlled by the family of French financier Michel David-Weill, is currently made up of three Lazard houses, each with a different ownership structure. After the change a seven-member management committee led by Mr David-Weill, 66, will govern the firm Lazards employs 2,500 worldwide, 1,100 of them in New York It made record profits of $300m (pounds 186m) last year..