Pearson agrees €656m sale of ‘Economist’ stake

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

The deal comes less than a month after Pearson agreed to sell the Financial Times and related titles to Japanese business publisher Nikkei for £844 million in order to focus on its core education business (See: Japan’s Nikkei buys Financial Times for $1.3 bn from Pearson).

Exor said the sale would take its stake in the Economist Group to 43.4 per cent from 4.7 per cent for a price of £287 million.

The sale includes changes to Economist Group articles that stipulate a voting cap of 20% for any single investor and a rule that no one person or company can own more than 50% of the group’s shares.

The Economist Group has increasingly been driven by subscription dollars, only generating about a quarter of its income from advertising in 2015-the reason for much of the downward pressure on magazines.

“The board’s priority was to secure the independence of the ownership of the Group and the continued editorial independence of The Economist“, said Rupert Pennant-Rea, the chairman of The Economist Group.

While many publications have been convulsed by the rapid shift of both readers and advertisers online, the Economist has grown in strength, targeting executives and policymakers with authoritative stories to boast a paid circulation of 1.6 million a week.

“The Board is also pleased to welcome Exor, an exemplary shareholder for the past six years, in its new role as the anchor investor in the Group”.

“We are convinced of the huge potential that still lies ahead and particularly in The Economist’s ability to seize the many development opportunities linked to the digitisation of the media industry”, John Elkann, the CEO of Exor.

The Economist Group comprises The Economist magazine, research division the Economist Intelligence Unit, and CQ Roll Call, a US legislative information provider.

The stake in The Economist held by the Rothschild banking dynasty also increased, from 21 per cent to 26 per cent, while Pearsons remaining holding will be repurchased by the Economist Group for $284 million.

Exor owns two Italian newspapers, La Stampa in Turin and the national daily Corriere della Sera.