Pearson Sells Its Stake in The Economist for $730.7 Million

First, the FT Group. Now, The Economist. Pearson, the world’s largest education company, has announced it will sell its 50% stake in The Economist

First, the FT Group. Now, The Economist. Pearson, the world’s largest education company, has announced it will sell its 50% stake in The Economist Group to the remaining shareholders for $730.7 million, reports The Atlantic.Among the shareholders is Exor, an Italian holding company owned by the Agnelli family, the founders of Fiat. With its $446 million payment to Pearson, Exor will now own 43.4% of The Economist, an increase from its current stake of 4.7%. The remainder of the Economist Group will purchase the rest of Pearson’s stake for $284.7 million. Though there are some legal hoops to jump through, Pearson expects the transaction to close during the fourth quarter.Despite Exor’s increased stake in The Economist, the publication will remain editorially independent.”

Pearson Sells Its Stake in The Economist for $730.7 Million

With their decision to sell, the board’s priority was to secure the independence of the ownership of the Group and the continued editorial independence of The Economist.”“The strength of the Group’s balance sheet meant that we could reorganize our shares so as to reinforce our editorial independence and benefit our shareholders. The transaction has the full support of the Board, the trustees and the current editor of The Economist as well as her surviving predecessors,” said Rupert Pennant-Rea, chairman for The Economist Group.According to Pearson’s announcement of the sale, the proceeds from the sale will be used for general operating funds, so it can focus on its global education strategy.”Pearson is proud to have been a part of The Economist’s success over the past 58 years, and our shareholders have benefited greatly from its growth. We have enjoyed supporting the company as it has built a global business, sustaining the excellence of its journalism and ensuring it is read more widely. We wish all our colleagues at The Economist every future success,” said John Fallon, chief executive for Pearson.”Pearson is now 100% focused on our global education strategy. The world of education is changing rapidly, and we see great opportunity to grow our business through increasing access to high quality learning globally,” he added.Pearson still owns a 47% stake in publisher Penguin Random House. In an interview with CNBC, Fallon said it is not currently exploring a sale.”It’s not on the block,” said Fallon. “That’s something that maybe we’ll consider somewhere in the future, but not today.”Insider Take:In the last month, Pearson has sold its stake in two well-respected, profitable media organizations, The Financial Times and The Economist. While its shift in strategy is deliberate as the company tries to narrow its focus, it seems odd that Pearson would just walk away from easy revenue – unless Pearson needs the cash to continue its restructuring.Fallon is, after all, the new kid on the block, having joined Pearson as CEO in January 2013. A year in, Fallon had cut costs by $215 million, axed 4,000 jobs, and acquired other businesses in the process, says Fortune.While Pearson is a well-known global brand in education circles, Fallon needs to start showing results from his reorganization, technology transformation, M&A activity and other changes to his board and investors while keeping the Pearson brand intact. We hope this is not change for the sake of change. Stay tuned.  

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