12th Aug 2015 09:15
LONDON (Alliance News) - Pearson PLC on Wednesday said it has struck a deal to sell its 50% stake in The Economist Group for GBP469 million in cash to Exor SpA, the investment vehicle run by Italy's Agnelli family, and to The Economist publisher itself.
The sale comes after the FTSE 100-listed education and publishing company announced the sale of the Financial Times Group, which includes the Financial Times Newspaper, to Japanese media group Nikkei Inc for GBP844 million in cash last month, as part of its efforts to focus on its education business.
That sale did not include the company's stake in the Economist Group, which is held via the Financial Times Ltd, and shortly after the sale of the FT Group was agreed the company confirmed that it was also in talks to sell the stake in the Economist Group. Other shareholders in the Economist include Cadbury, Rothschild, Schroder and other family interests.
Under the deal, Exor will acquire 27.8% of The Economist Group's shares for GBP227.5 million, along with all of the B special shares for GBP59.5 million from Pearson. In addition, The Economist Group will acquire the rest of Pearson's shares for GBP182 million.
Exor is an Italian investment vehicle controlled by the Agnelli family. It is the controlling shareholder in car company Fiat Chrysler Automobiles and owns a majority stake in Juventus football club.
The sale is subject to regulatory and Economist Group shareholder approval, as well as the group's independent trustees. Both the sale of the Economist and the FT Group are expected to close in the fourth quarter of 2015.
It said it will use the proceeds from the sale for general corporate purposes and to invest in its global education strategy.
"Pearson is proud to have been a part of the Economist's success over the past 58 years, and our shareholders have benefited greatly from its growth. We have enjoyed supporting the company as it has built a global business, sustaining the excellence of its journalism and ensuring it is read more widely. We wish all our colleagues at The Economist every future success," said Pearson Chief Executive John Fallon.
"Pearson is now 100% focused on our global education strategy. The world of education is changing rapidly and we see great opportunity to grow our business through increasing access to high quality learning globally," Fallon added.
Pearson said that the Economist Group contributed GBP21 million of its operating income and around 3 pence to adjusted earnings per share in 2014.
When Pearson reported its interim results last month, just a day after it agreed the sale of the Financial Times, the company reiterated its expectations of adjusted earnings per share of between 75 pence and 80p in 2015, assuming it has ownership of its PowerSchool business and FT Group for the entirety of 2015.
Bernstein said Pearson had sold the stake for a "good price", ahead of the consensus valuation of GBP400 million. Investors will now focus on how the cash will be redeployed, Bernstein said, as between this sale and the FT, it will have around GBP1.1 billion in cash by the end of the year.
Shares in Pearson were down 0.6% at 1,166.00 pence Wednesday morning.
By Sam Unsted; [email protected]; @SamUAtAlliance and Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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