18th Feb 2019 08:06
LONDON (Alliance News) - Pearson PLC said Monday it has agreed to sell its US K12 courseware business for USD250 million in a "major milestone" for its simplification programme.
The FTSE 100-listed media group agreed to sell the business - which provides textbooks and other resources to students in the US from kindergarten to 12th grade, the last year before university - for USD250 million to Nexus Capital Management LP.
The deal will see Pearson receive an initial USD25 million cash payment. The remaining USD225 million will be repaid over three to seven years through an unconditional vendor note.
Pearson also will be entitled to 20% of all future cash flows to equity holders and 20% of net proceeds in the event the business is sold following the repayment of the vendor note. The firm explained this was "structured to provide Pearson with the potential to capture future upside in the US K12 courseware adoptions market over the coming years".
The firm added the sale is an "important part of our ongoing work to become a simpler and more efficient company, focused on fewer, bigger opportunities that contribute towards growth and our digital transformation".
In 2018, the K12 courseware unit generated GBP20 million in operating profit on revenue of GBP364 million. In mid January, Pearson explained it expected the business to generate between GBP540 million and GBP545 million in operating profit in 2018.
"School publishing in America has been an important part of Pearson for many years, and what it does matters to teachers and students across the country," Pearson Chief Executive Officer John Fallon said. "We're pleased to have found new owners who are committed to its future, and we wish it every success."
"The sale frees us up to focus on the digital first strategy that will drive our future growth," Fallon added. "Through our assessment, virtual school, advanced placement and career and technical education programmes, we will still serve schools across America and we will now be better placed to focus on the areas in which we can best help their students to be successful in their studies and future careers."
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