Pearson to acquire English language training company Grupo Multi in Brazil

Pearson2Pearson is to acquire 100% of Grupo Multi, the adult English Language Training company in Brazil. Pearson will acquire Grupo Multi from the Martins family, the company’s 78% majority shareholders, and the investment firm Kinea for approximately £440m (R$1.7bn) in cash and the assumption of £65m (R$0.25bn) of debt.

multiGrupo Multi is the largest provider of private language schools in Brazil serving over 800,000 students across more than 2,600 franchised schools. It primarily delivers English language courses through a range of school brands including Wizard, Yazigi, Microlins and Skill. Pearson already has approximately 500,000 students in K12 schools through its sistemas business in Brazil.

Brazil is one of the world’s largest English Language Learning markets with the English Language Training market estimated to be worth £2bn (R$7bn) and a total of 2.8 million students enrolled across children, teenage and adult age groups. It is expected to grow rapidly supported by an expanding middle class population and greater coverage of the addressable market by franchise schools.

This growth is fuelled by the fact that English language fluency in Brazil is low by international standards. In addition, a shortage of English speakers in key sectors including tourism, transportation, and hospitality is considered to be one of Brazil’s challenges as it prepares to host high-profile global events including the World Cup and the Olympics.

John Fallon, chief executive of Pearson, said:

“Brazilians’ appetite for learning English as a global language of business and trade shows every sign of continuing to grow rapidly as Brazil becomes a global player in commerce, travel and a host of other industries.

Over the past twenty five years, Grupo Multi has become the most respected English learning company in Brazil by offering high quality affordable English language learning that has made a real impact on the lives of its students. We intend to sustain and grow the business, helping many more young Brazilians to acquire the English language skills that will help them succeed in their careers.”

The transaction is subject to a regulatory review that Pearson expects to be completed in the first half of 2014. In 2012, Grupo Multi generated operating profits of £42m (R$130m) and at 31 December 2012 had gross assets of £200m (R$667m). During 2014, Grupo Multi will be integrated into Pearson’s Professional Line of Business and Growth geographic segment. In 2015, Pearson expects a full year contribution from Grupo Multi to enhance adjusted earnings per share and to generate a return on invested capital slightly above Pearson’s weighted average cost of capital.

Morgan Stanley acted as financial adviser to Pearson on this transaction.

UK, London & Brazil, São Paul0

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