After Financial Times, now Pearson in talks to sell Economist

This sale did not include the stake in the Economist, which is held via the Financial Times Ltd.

Selling the FT Group and the Economist Group stake would leave Pearson with almost £1bn in net proceeds – strengthening its balance sheet at a time when its credit rating has a negative outlook from Moody’s, due to uncertainty in the education sector. But its stake, constituted of B shares, entitle it to name only six of the 13 members of the group’s board.

Pearson’s 50 percent holding in The Economist Group could be valued at as much as 400 million pounds ($620 million), reported by two people familiar with the matter who asked not to be identified because the discussions are private.

Pearson’s sale of the FT, which it has owned since 1957, is subject to regulatory approval and expected to complete in the fourth quarter of this year.

“There is no certainty that this process will lead to a transaction”, noted the publisher.

Nikkei won the bidding for the FT at the last minute, outmaneuvering Axel Springer, the German media group whose stable of assets includes a stake in POLITICO’s European edition. The FT’s publisher, Pearson Group admitted its 50% of The Economist was also on the block. The families were unlikely to back any plans by Pearson to sell to a third party, industry bankers said.

He also praised Pearson for having been a model owner, although there have been whispers from some at the Financial Times that its parent never invested quite enough in growth.

Any deal has to be approved by the trustees of the Economist Group, whose role is to preserve the magazine’s editorial independence.

The Nikkei Weekly newspaper continued but was rebranded, along with the corresponding website, as the Nikkei Asian Review in 2013, adopting a magazine format that last year had a circulation of around 12,000 copies a week, with more than 90% sold in Asia. However, the 50 percent stake in The Economist Group will remain part of Pearson as will the FT’s London headquarters. Without the FT and the Economist, Pearson’s only non-education business would be a 47 per cent stake in Penguin Random House.

After years of on-and-off deliberations, Mr. Fallon believed a long and costly project to transform the FT into a digital-first media platform was beginning to bear fruit, making it ripe for a sale. That is nearly three times more than the Financial Times, which made 24 million pounds in adjusted operating profit in 2014.