23rd Jul 2015 13:20
LONDON (Alliance News) - Pearson PLC Thursday confirmed it is in advanced discussions over the potential sale of the FT Group following media speculation, although it has not disclosed with whom.
The FT Group consists of the Financial Times, a 50% shareholding in The Economist Group, and the Vedomosti joint venture in Russia with Dow Jones and the publishers of the Moscow Times.
The company said there can be no certainty these talks will lead to a sale, and a further announcement will be made if and when appropriate.
The response follows a report from Reuters that Pearson was set to announce a sale of the Financial Times "imminently" to a "global digital news company".
Speculation has been mounting that Pearson will sell the financial newspaper as it looks to focus increasingly on its education and publishing businesses. Among the suitors that have been suggested in media reports are German publisher Axel Springer SE, Thompson Reuters Corp and Bloomberg LP.
German news magazine Spiegel has circled Axel Springer as the front-runner, saying Axel Springer may be poised to make an announcement within the "next few hours", according to sources at the publisher.
Meanwhile, the Financial Times itself reported that Japanese media group Nikkei Inc has had talks with Pearson in recent weeks, but said the talks with Axel Springer are further advanced, citing people close to the talks.
Pearson has owned the Financial Times since 1957. Pearson, which at one point was a media and entertainment conglomerate, had previously owned assets including the Tussauds group - consisting of Alton Towers and the Madame Tussauds waxwork museums.
In 2013 the company reorganised its operations into a new structure, to consist of three arms - school, higher education and professional. The FT Group makes up part of its professional segment. It sold its PowerSchool Business, which provides K-12 student information systems, for USD350 million in June. At that time it said the sale would allow it to further simplify the business and enable it to focus "more directly on learning outcomes."
Bloomberg had reported on Monday that Pearson was exploring a potential sale of the Financial Times. That report suggested the sale may value the business at as much as GBP1 billion.
Pearson last broke out the FT Group's financials in 2013, when it reported an adjusted operating profit of GBP55 million, and sales of GBP449 million. The Financial Times said its total circulation grew 10% in 2014, and subscriptions rose 21%.
John Micklethwait, former editor-in-chief of the Economist, replaced Matt Winkler as editor-in-chief of Bloomberg News at the start of the year.
Liberum analyst Ian Whittaker notes that the timing of the announcement is "interesting" as Pearson is due to report interim results on Friday, as it could be used to distract attention from a negative trading statement or a cut to guidance.
At the time of its first quarter results in April, Pearson reiterated its full-year earnings guidance as the strong dollar boosted sales, and announced that Chairman Glen Moreno plans to step down in the next year.
Despite the positive results, tougher conditions in the North American education markets have been a source of trepidation for analysts, particularly after Pearson lost the majority of its contract to administer state-required exams in Texas in April, and failed to win a key testing contract in California.
Liberum thinks the GBP1 billion price tag that has been suggested is too high, although it questions what would be included in the deal, as incorporating the 50% stake in the Economist would raise the price.
Shares in Pearson were trading up 1.4% at 1,226.00 pence Thursday afternoon.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Pearson