Pearson to sell 50% stake in Economist

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Britain’s Pearson, fresh from agreeing the sale of the Financial Times newspaper to Japan’s Nikkei, said on Wednesday it would sell its 50 per cent stake in the Economist Group for £469 million to its existing investors.

Pearson said in a statement it had agreed to sell 27.8 per cent of the Economist Group’s shares to Exor, the holding of the Agnelli family, for £227.5 million and all of the B special shares for £59.5 million.

Pearson’s remaining ordinary shares will be repurchased by The Economist Group for a total consideration of £182 million.

The deal effectively ends London-based Pearson’s role in the news publishing business after more than 50 years, following its sale of the FT Group to Japan’s Nikkei for $1.3 billion.

Proceeds from the sale give Pearson chief executive John Fallon extra firepower to turn around the company’s education business.

“Pearson is now 100 per cent focused on our global education strategy,” Mr Fallon said in the statement. “The world of education is changing rapidly and we see great opportunity to grow our business.”

The Economist Group includes the Economist magazine, the Economist Intelligence Unit and titles such as CQ Roll Call.

The Economist Group reported 60 million pounds in operating profit on sales of £328 million in the year through March.

The Economist, which has been edited in London since 1843 and is read by many political and business leaders, has a circulation of 1.6 million.

Pearson said last month that discussions with The Economist Group’s board and trustees about a sale of its stake were under way.

The proceeds will give Pearson, the world’s largest education company, resources to find growth in online-education materials and services.

The company has recently lost testing contracts in the US and its first-half sales stalled as demand for textbooks continued to shrink and fewer students enrolled in college.

Exor also owns investments Italian newspaper La Stampa. Fiat is also the biggest investor in RCS Media Group , which publishes Italy’s biggest newspaper Corriere della Sera.

John Elkann (39) the chief executive of Exor, is also a board member of Rupert Murdoch’s News Corporation. Pearson’s 47 per cent stake in book-publishing venture Penguin Random House may also be up for sale.

Beginning in October, Pearson has the option to divest the holding under an agreement with Germany’s Bertelsmann , which owns the remainder.

People familiar with the matter said last year that Bertelsmann intended to buy all or part of the stake as soon as this year.

John Micklethwait, current editor-in-chief of Bloomberg and former editor-in-chief of the Economist, still owns shares in The Economist Group and was not involved in the reporting and editing of this story.