Pearson agrees to sell 50% stake in The Economist Group

August 13, 2015 — Fusion DigiNet

EconomistPearson has agreed to sell its 50% stake in The Economist Group for £469 million, payable in cash.

EXOR S.p.A. has agreed to purchase 27.8% of The Economist Group’s Ordinary shares for consideration of £227.5 million and all of the B special shares for consideration of £59.5 million from Pearson. Pearson’s remaining Ordinary shares will be repurchased by The Economist Group for a total consideration of £182 million.

The sales comes just weeks Pearson sold the Financial Times to Nikkei for £884 million.

The Economist Group is a leading source of analysis on international business and world affairs, delivered through a range of publications and services including: The Economist newspaper, one of the world’s leading weekly business and current affairs publications with a circulation of around 1.6 million; Economist.com; the Economist Intelligence Unit; CQ Roll Call and TVC.

Pearson reports its stake in The Economist Group as an associate and includes 50% of its profit after tax in operating income. In 2014, The Economist Group contributed £21 million to Pearson’s operating income and approximately 3 pence to adjusted earnings per share. At 31 December 2014, the carrying value of Pearson’s investment in The Economist Group was £nil.

John Elkann, Exor’s chief executive, said: “By increasing our investment in The Economist we are delighted to affirm our role as one of the Group’s long-term supportive shareholders, along with the Cadbury, Layton, Rothschild and Schroder families and other individual stable investors.

The transaction is subject to a number of regulatory approvals and to approval by both a 75% majority of The Economist Group shareholders and the group’s independent trustees. The provisions of the City Code on Takeovers and Mergers do not apply to The Economist Newspaper Limited. The transaction is expected to close during the fourth quarter of 2015.

UK, London & Italy, Turin

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Pearson half-year results: FT Group’s Mergermarket business put up for sale

July 30, 2013 — Fusion DigiNet

Pearson2Pearson has published its half year results, at the same time  announcing that it is exploring the possibility of selling financial intelligence business Mergermarket. John Fallon, chief executive, said that while Mergermarket is a growing business, it does not fit with Pearson’s goal to be a market-leading education company.

Highlights

  • Pearson is exploring the possible sale of Mergermarket, the financial intelligence, data and analysis business. Pearson has appointed J.P. Morgan Cazenove to advise on the process.
  • John Fallon, the chief executive of Pearson, stressed that the paper was not for sale.
  • Pearson revenues up 5% to £2,243M
  • FT Group Revenues flat – £217M in 2013, £216M in 2012
  • FT Group Operating Profit up to £26M from £21M in 2012
  • Penguin Random House merger completed on 1 July 2013; strong growth at Penguin (up 14%) in the first half.
  • Adjusted operating profit £50m lower at £137m, including £37m of gross restructuring charges and, in addition, investments to support new product launches in the second half.
  • Adjusted earnings per share down 4.9p to 9.9p including restructuring charges.
  • Interim dividend up 7% to 16p.

Click on the Financial Highlights table below to enlarge the view

Pearson Half-Year Results 2013

John Fallon, chief executive, said: “In trading terms, 2013 has begun much as we expected. In general, good growth in our digital, services and developing-market businesses continues to offset tough conditions for traditional publishing. Our strategy is to transform Pearson into a single operating company that is sharply focussed on the biggest needs in global education and on measurable learning outcomes. With our restructuring programme on track and the reorganisation of the company under way, we are making significant progress towards that goal.”

Read the full announcement here.

UK, London

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Pearson announces preliminary results for the year ending 31 December 2012

February 25, 2013 — Fusion DigiNet

Pearson has announced preliminary results for the year ending 31 December 2012.se_header_logo_pearson

Full details of preliminary results

Financial highlights

  • Sales up 5% at CER to £6.1bn (with digital and services businesses contributing 50% of sales)
  • Adjusted operating profit 1% higher at £936m
  • Adjusted EPS of 84.2p (86.5p in 2011)
  • Operating cash flow of £788m (£983m in 2011)
  • Return on invested capital of 9.1% (9.1% in 2011)
  • Dividend raised 7% to 45.0p.

Market conditions and industry change

  • Market conditions generally weak in developed world and for print publishing businesses; generally strong in emerging economies and for digital and services businesses.
  • Continuing structural change in education funding, retail channels, consumer behaviour and content business models.
  • Considerable growth opportunity in education driven by rapidly-growing global middle class, adoption of learning technologies, the connection between education and career prospects and increasing consumer spend, especially in emerging economies.

Strong competitive performance

  • North American Education revenues up 2% in a year when US School and Higher Education publishing revenues declined by 10% for the industry as a whole.
  • International Education revenues up 13% with emerging market revenues up 25%.
  • FT Group revenues up 4% with the Financial Times’ total paid print and online circulation up to 602,000; digital subscriptions exceed print circulation for the first time.
  • Penguin revenues up 1%, with strong publishing performance and eBooks now 17% of sales.

Accelerated shift to digital & services and to fast-growing economies

  • Pearson announces gross restructuring costs of approximately £150m in 2013 (£100m net of cost savings achieved in the year), focused on:
  1. significantly accelerating the shift of Pearson’s education businesses towards fast-growing economies and digital and services businesses;
  2. separating Penguin activities from Pearson central services and operations in preparation for the merger of Penguin and Random House.

Restructuring expected to generate annual cost savings of approximately £100m in 2014.

  • In 2014, £100m of cost savings to be reinvested in organic development of fast-growing education markets and categories and further restructuring, including the Penguin Random House integration.
  • From 2015, restructuring programme expected to produce faster growth, improving margins and stronger cash generation.

Outlook

·      Pearson expects tough trading conditions and structural industry change to continue in 2013.

·      Excluding restructuring costs and including Penguin for the full year, Pearson expects to achieve 2013 operating profit and adjusted EPS broadly level with 2012.

John Fallon, chief executive, said: “Pearson has a sound, successful strategy: now we are significantly accelerating its implementation. Trading conditions are tough and structural changes mean many of our traditional publishing activities are under pressure. But the underlying demand for effective education remains immensely powerful and our developing world and digital services businesses have real scale and momentum. The restructuring of the company that we are announcing today is designed to strengthen dramatically Pearson’s position in digital education services and in our most important markets for the future – and to enable us to capture the once-in-a-generation opportunity that comes with being the world’s leading learning company.”

UK, London

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Pearson and Bertelsmann agree Penguin and Random House merger

October 29, 2012 — Fusion DigiNet

Pearson and Bertelsmann have agreed combine Penguin and Random House. The possibility of the merger was reported in the media last week and over the weekend it was also reported that a possible cash offer from News Corp was rejected.

Under the terms of the agreement, Penguin and Random House will combine their businesses in a newly-created joint venture named Penguin Random House. Bertelsmann will own 53% of the joint venture and Pearson will own 47%. The joint venture will exclude Bertelsmann’s trade publishing business in Germany and Pearson will retain rights to use the Penguin brand in education markets worldwide.

Bertelsmann will nominate five directors to the Board of Penguin Random House and Pearson will nominate four. John Makinson, currently chairman and chief executive of Penguin, will be chairman of Penguin Random House and Markus Dohle, currently chief executive of Random House, will be its chief executive.

The new organisation will generate synergies from shared resources such as warehousing, distribution, printing and central functions. Pearson and Bertelsmann intend that the combined organisation’s level of organic investment in authors and new product models will exceed the total investment of Penguin and Random House as independent publishing houses.

The combination is subject to customary regulatory and other approvals, including merger control clearances, and is expected to complete in the second half of 2013.

In 2011, Random House reported revenues of €1.7bn (£1.48bn) and operating profit of €185m (£161m). Penguin reported revenues of £1.0bn and operating profit of £111m with total assets of £1.0bn. After completion, Pearson will report its 47% share of profit after tax from the joint venture as an associate in its consolidated income statement.

Under the terms of the agreement, neither Pearson nor Bertelsmann may sell any part of their shareholding in Penguin Random House for three years. To protect Pearson’s interests as a minority shareholder, if Bertelsmann declines a Pearson offer to sell its entire shareholding, Pearson may require a recapitalisation by which Penguin Random House raises debt of up to 3.5x EBITDA, with a dividend distributed to shareholders in line with their ownership. In addition, from five years after completion, either partner may require an IPO of Penguin Random House.

Marjorie Scardino, chief executive of Pearson, said: “Penguin is a successful, highly-respected and much-loved part of Pearson. This combination with Random House – a company with an almost perfect match of Penguin’s culture, standards and commitment to publishing excellence – will greatly enhance its fortunes and its opportunities. Together, the two publishers will be able to share a large part of their costs, to invest more for their author and reader constituencies and to be more adventurous in trying new models in this exciting, fast-moving world of digital books and digital readers.”

Thomas Rabe, chairman and CEO of Bertelsmann, said: “With this planned combination, Bertelsmann and Pearson create the best course for new growth for our world-renowned trade-book publishers, to enable them to publish even more effectively across traditional and emerging formats and distribution channels.It will build on our publishing tradition, offering an extraordinary diversity of publishing opportunities for authors, agents, booksellers, and readers, together with unequalled support and resources.”

UK, London & Germany, Gütersloh & USA, New York, NY

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Bertelsmann and Pearson in talks about combining their publishing divisions

October 25, 2012 — Fusion DigiNet

The FT and others are reporting that Bertelsmann and Pearson are in talks about combining their Penguin and Random House publishing divisions and that the discussions have focused on a merger in which Bertelsmann would have a stake of more than 50 per cent.

Pearson have issued the following statement. “Pearson notes recent media coverage regarding Penguin, its consumer publishing division, and Random House (part of Bertelsmann). Pearson confirms that it is discussing with Bertelsmann a possible combination of Penguin and Random House. The two companies have not reached agreement and there is no certainty that the discussions will lead to a transaction. A further announcement will be made if and when appropriate.”

UK, London & USA, New York, NY

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