4th May 2007 17:30
Pearson PLC04 May 2007 4 May 2007 PEARSON ACQUIRES HARCOURT ASSESSMENT AND HARCOURT EDUCATION INTERNATIONAL FROM REED ELSEVIER Pearson, the international education and information company, today announcesthat it has agreed to acquire Harcourt Assessment and Harcourt EducationInternational from Reed Elsevier for $950m in cash. The acquisition extends Pearson's position as the world's leading educationcompany by adding international reach, complementary products and newcapabilities. The transaction does not include Harcourt's US School basal andsupplementary publishing businesses. In testing, Harcourt Assessment has an extensive catalogue of high qualityresearch-based education and clinical assessment products for children andadults. Harcourt's heritage and expertise in test development and publishingextends Pearson's leading position in providing US states and the FederalGovernment with contracted testing services including programme management,marking, logistics and operations. Pearson and Harcourt already workside-by-side on several state contracts, where Harcourt provides testdevelopment and Pearson provides test marking and administration. Harcourt publishes market-leading tests in many segments including the StanfordAchievement Test series and the Watson-Glaser Critical Thinking Appraisal forschool students; the Miller Analogies Test for graduate school applicants; theNaglieri and Versant tests for English language learners; and the WechslerIntelligence Scales and Raven's Matrices for clinical assessment (whichcomplement Pearson's existing clinical assessments). These tests are sold in theUS and around the world. In international education, Harcourt publishes textbooks and online learningmaterials for teachers and students in primary and secondary schools and thevocational market. With imprints including Heinemann, Rigby, Ginn, Payne Gallwayand Raintree, it is a leading school publisher in the UK, Australia and NewZealand; it is one of the fastest growing school publishers in South Africa; andit is also active in many other regions including Asia, the Middle East, Africaand the Caribbean. In recent years, Pearson has been building its position in these markets,supported by its investments in content, assessment and digital learningservices. The transaction will accelerate Pearson's goal of combiningeducational content and innovative technology to offer students and teachers newproducts and services that can personalise learning to the needs of eachstudent. In 2006, Harcourt Assessment and Harcourt Education International contributed$524m of sales and $31m of operating profit to Reed Elsevier (beforerestructuring charges and one-off costs relating to the US testing business).The businesses generated $54m of operating profit in 2005 and $84m in 2004. Atthe end of 2006, they reported gross assets of $741m. The transaction will close in several stages, following regulatory review by therelevant authorities where required. Although the timing of regulatory approvalwill influence the phasing of integration spend and benefits, Pearson expectsthe acquisition to be broadly neutral to adjusted earnings per share afterrestructuring costs in 2007 and 2008. Pearson also expects the acquisition toenhance Pearson's adjusted EPS and generate a return above Pearson's cost ofcapital from 2009. The purchase price includes a tax benefit worth approximately$125m, which we expect to reduce Pearson's tax rate on adjusted earnings pershare by around one percentage point from 2008. Marjorie Scardino, chief executive, said: "We have long admired these businesses. They bring new intellectual property,capabilities and skills to Pearson, and will enable us to accelerate ourstrategy of leading the personalisation of learning, both in the US and aroundthe world. We know that their people share our commitment to education, and welook forward to welcoming them as colleagues." Ends For more information: Luke Swanson/ Simon Mays-Smith +44 (0)20 7010 2310 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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