)
British education company Pearson on Wednesday agreed to sell its 50 per cent stake in The Economist group, the publisher of The Economist, to other shareholders of the group for $730 million.
The move comes as Pearson, which sold The Financial Times last month, is trying to streamline its operations to focus primarily on its core education and assessment businesses.
The biggest participant in The Economist group transaction will be Exor, the Agnelli family's Italian holding company and a major shareholder in Fiat Chrysler Automobiles.
| THE ECONOMICS OF THE ECONOMIST |
|
Exor, which already holds a stake of almost five per cent in The Economist group, will pay £286.5 million, or about $446 million, for a combination of 27.8 per cent of The Economist group's ordinary shares and all of the firm's Class-B shares.
The Economist group will buy the remainder of Pearson's ordinary shares for £182 million. The ordinary shares can be owned by employees, past employees and founding members of the company.
The Economist group said it would sell its London headquarters to help pay for the share buyback.
An increased stake in the London-based publisher will not increase Exor's influence, because of a complicated trust structure that essentially ensures The Economist group cannot be taken over by owners eager to impose their own interests.
Analysts said that Pearson's stake sale was inevitable after the company sold The Financial Times to the Japanese media company Nikkei for $1.3 billion, in its bid to leave the newspaper publishing business.
"With the complicated ownership structure, it was always going to be more difficult than the FT sale," said Ian Whittaker, a media analyst at Liberum Capital in London. He added that Pearson would likely use the money to pay down debt and to buy other education assets.
"They can't just sit on the cash," he said.
As the sale does not give Exor, whose other holdings include the Italian newspaper La Stampa, editorial control of The Economist group, analysts said the magazine's stance was unlikely to change.
"Pearson is proud to have been part of The Economist group's success over the past 58 years," John Fallon, the company's chief executive, said in a statement on Wednesday. "We have enjoyed supporting the company as it has built a global business."
Unlike other magazine and newspaper outlets, The Economist group, which includes CQ Roll Call, has been consistently profitable for decades. Its main asset, The Economist, was founded in 1843.
The weekly magazine has garnered a global readership of primarily affluent, educated people, and its many admirers include the former mayor of New York City, the billionaire Michael R Bloomberg.
The company earned about $93 million for the year ended March 31, on a revenue of more than $500 million, according to its annual report. Though it is privately held, the company releases its financial records each spring. The Economist's circulation has increased to about 1.6 million in 2015, from around a million in 2006, defying a trend of declining circulation that overshadows the industry.
Investors in The Economist group will vote on the share sale next month, and the meeting will include a separate vote to prohibit any individual or company from owning more than 50 per cent of the group's shares.
© 2015 The New York Times Service
