14th May 2007 16:20
Pearson PLC14 May 2007 14 May 2007 Pearson agrees to acquire eCollege(R) for $477m Pearson, the international education and information company, today announcesthat it has agreed to acquire eCollege(R) (Nasdaq: ECLG), a leader in thefast-growing US online distance learning market. The net cost to Pearson is$477m, consisting of a consideration of $538m ($22.45 per share) less $41m ofproceeds from the agreed sale of eCollege's Datamark division and approximately$20m of net cash on eCollege's balance sheet. The transaction has been approvedby eCollege's Board of Directors and is subject to approval by its shareholders. eCollege, founded in 1996, works with its partner educational institutions todesign, build and support online degree, certificate, diploma and professionaldevelopment programs. It provides a full range of on-demand software servicesincluding course management, virtual campuses, and assessment, reporting andretention monitoring tools. The company also provides a suite of supportservices which include hosting, help desk, course development, technicalconsulting, instructional design and faculty training. eCollege supports approximately 180 institutions and its customers include someof America's leading university and career colleges including DeVry University,Kaplan University, Laureate, Texas A&M University at Commerce and EasternMichigan University. In 2006, student enrollments in its online courses wereapproximately 1.2 million. It has played a particular role in helping educational institutions broadenaccess to postsecondary education for students who may be unable to attendfull-time. From 2002 to 2006, the number of students taking online postsecondaryqualifications with US institutions grew at a compound annual rate of more than30% (source: Eduventures). This acquisition extends Pearson's position as the world's leading educationcompany and supports its goals of building its digital and internationaleducation businesses. eCollege is a pioneer in online distance learning, both inthe postsecondary and in the K-12 virtual schools segment, and it is theindustry leader in the fast-growing career college segment in the US. Pearson isa pioneer in the use of technology to improve learning, with leading positionsin digital learning materials, student information systems, online testing, testscoring and homework and formative assessment. In 2006, Pearson generated morethan $1bn of sales from these digital learning products and services. Pearson expects the acquisition to strengthen both its own education businessand eCollege in three major areas: 1. Pearson and eCollege share many customers in the higher education market. Together the two companies expect to provide customers with additional value and choice, and a full range of services across content, curriculum development, formative assessment and homework technologies and outsourced solutions. Pearson's publishing divisions will continue to work with third party commercial and open source course management providers, and eCollege will continue to work with third party publishers; 2. Pearson's scale and reach will enable eCollege to serve new customers in school, post-secondary education and professional/ vocational markets, both in the US and around the world. Pearson has education companies in 55 countries and in 2006 generated $1.6bn of sales in education markets outside the US; eCollege is building an international and fully multi-lingual e-learning platform; 3. The two companies will reduce costs by eliminating eCollege's corporate and public company costs and gaining scale benefits of shared hosting, technical and support services. In 2006, eCollege generated sales of $52m and operating profit of $22m beforecentral costs (and excluding the Datamark division). From 2003 to 2006, salesgrew at a compound annual rate of 22%. Pearson expects the acquisition to bebroadly neutral to adjusted earnings per share in 2008, its first full year, andto enhance adjusted EPS and generate a return above Pearson's cost of capitalfrom 2009. The transaction is expected to close in the third quarter of 2007. It includesan agreement to sell the Datamark student enrollment business to a group ofinvestors led by Oakleigh Thorne, eCollege's chairman and CEO. Matthew Schnittman, President of eCollege's eLearning division, will joinPearson and continue to lead the company. It will operate as a separate unitfrom Pearson's textbook publishing companies and will retain its offices inDenver, Colorado. Marjorie Scardino, Pearson's chief executive, said: "eCollege will make Pearson an even stronger education company. It has been avalued partner for some years, and we have the highest regard for its people andtheir skills and commitment to serving their education customers. Theacquisition meets our financial goals and supports our strategy of combiningcontent, technology and services to advance learning." Ends For more information: Luke Swanson/ Simon Mays-Smith: 14 May in London +44 (0)20 7010 231015 May in New York +1 (212) 641 2409 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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