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Financial Times Seen as Going on the Block

Pearson May Seek as Much as 1 Billion Pounds

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Pearson is planning to explore a sale of the Financial Times newspaper as the company focuses on its faster-growing education business, people with knowledge of the situation said.

The company has decided to consider offers for the newspaper this year, said the people, who declined to be identified because the process is private. Pearson may initiate sale preparations ahead of the departure of Marjorie Scardino, who is stepping down as CEO in January, said one person. Pearson has not hired an investment bank to advise on the sale, the people said.

During her 16-year tenure, Ms. Scardino defended her company's ownership of the Financial Times, Britain's flagship financial daily, for which Pearson may seek as much as 1 billion pounds ($1.6 billion), a person familiar with the matter said. The paper is worth at least $1 billion, two other people said. FT Group accounts for about 8% of Pearson's revenue and 12% of profit.

Potential bidders may include wealthy individuals from Russia, the Middle East or Asia, as well as Bloomberg LP, one of the people said. Bloomberg LP, the parent of Bloomberg News, has made an offer for the newspaper before and been turned down, another said.

News Corp. might not bid due to regulatory concerns because it already owns the London-based Times newspaper, a person said. Thomson Reuters may also decide not to make an offer, another person said.

Asked about the fate of the Financial Times last month, John Fallon , who is set to succeed Scardino, said that the newspaper was "highly valued and a very valuable part of Pearson."

"We have said many times that the FT is a valued and valuable part of Pearson," said Charles Goldsmith, a spokesman for Pearson. "We are not in the habit of responding to rumors, speculation or reports about our portfolio, however this particular Bloomberg story is wrong." He declined to elaborate.

David Girardin, a spokesman for Thomson Reuters, and Nathaniel Brown, a spokesman for News Corp., declined to comment. A spokeswoman for Bloomberg LP also declined to comment.

FT Group, which owns the newspaper and a 50% stake in The Economist magazine, reported a 27% rise in adjusted operating profit to 76 million pounds last year.

Ian Whittaker, an analyst with Liberum Capital, says the newspaper group is worth 777 million pounds, or $1.2 billion, based on 2012 estimates of the company's earnings.

Pearson has been emphasizing its education and professional businesses, which provide texts and software for students and employees, through acquisitions. The North American education unit accounted for more than half of operating income last year, growing 19% to 493 million pounds.

Last week, the company agreed to combine its Penguin unit with Bertelsmann SE's Random House to create the largest book publisher in the U.K. and the U.S. The Penguin deal was indicative of the firm's determination to focus on education, one of the people said.

Over the past 12 months, Pearson has made a series of 10 acquisitions for a total of $1.2 billion in the education industry, which has proven more profitable than its journalism business.

~Bloomberg News~

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