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Posts Tagged ‘Pearson’

Pearson Cleared by OFT for Harcourt Education Acquisition

Pearson‘s acquisition of Harcourt Education in the UK has escaped a possible referral to the Competition Commission, according to the Bookseller. In a statement put out Friday, the Office of Fair Trading said it had decided, based “on the information currently available to it”, not to refer the completed merger to the Competition Commission. It did not go into further detail, but added that the text of the decision would be placed on the Office of Fair Trading’s web site at www.oft.gov.uk soon.

Pearson Education acquired Harcourt Education from Reed Elsevier in May for $950m. But the OFT announced in June that it was considering whether the deal would result in “a substantial lessening of competition” in the UK’s educational publishing market, forcing Pearson to put its integration plans on ice

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South African Publishing Merger Questioned

The South African Business Day reports that the Shuttleworth Foundation had lodged an objection with the Competition Commission to the possibility of a merger between South African publishing companies Maskew Miller Longman and Heinemann, resulting from the merger of their international holding companies, Pearson and Harcourt Education International, the foundation said yesterday.

If the Competition Commission found that there was an effective South African merger and that this contravened South African anti-monopoly laws it could force one or both of the international companies to sell off their South African concerns, or dispose of them in a way that did not constitute a merger, said Andrew Rens, the foundation’s intellectual property fellow. The commission has until August 14 to decide whether the international merger means an effective merger between the South African companies.

Sluggish Dollar Affects Penguin Results

Pearson, parent company of Penguin, has reported its 2007 interim results. Its education unit increased sales by 7% and moved into first-half profit of 5m pounds, while Penguin revenues were up 1% with profits 11% higher. “Our half-year results are always just a hint of our potential for the year, but certainly a strong hint this year,” said chief executive Marjorie Scardino. “Penguin’s publishing and profit are both solid and promising, as is its approach to change in publishing; and in Education we continue to set the pace as we use technology to personalize learning.”

Riverdeep, Mergers High

The New York Times rightfully wonders just who on earth is this Barry O’Callaghan guy and why he’s not only bought up Houghton Mifflin but now Harcourt Education, thereby turning a small Irish software company into a giant American textbook publisher. Until last year, writes Eric Pfanner, Riverdeep was a relatively small software company, best known for educational programs like Reader Rabbit. If the Harcourt acquisition is completed, the company would vault past McGraw-Hill and Pearson to become the biggest textbook publisher in the United States.

So how did that happen, especially as Wolters Kluwer, Pearson and Reed have been involved in high-profile acquisitions and sales of their own? Analysts say private equity has been attracted to the educational business by steady cash flows, a relative lack of competition and expectations that spending will increase in the coming years as states like California step up textbook replacement programs – but big companies are anxious to sell because educational publishing has lagged behind areas like medical, legal and scientific publishing in the shift to digital distribution.

In comes a company like Riverdeep, where O’Callaghan sees an opportunity to bring into the future an industry long dominated by a handful of big players. “The idea of marrying content with technology holds strategic appeal,” said Drew Crum, an analyst at Stifel Nicolaus in Cleveland. But as the Sunday Business Post reports on what may prove to be the merger’s biggest stumbling block: although valued at $11 billion, the enlarged company has debts of $7.4 billion, according to analysts, and company president Jeremy Dickens admitted there would be an annual interest bill of $400 million. Hence the 11.8 percent stake in HM Riverdeep by Reed to inject some degree of stability. The question is, how far and how long?

Reed Elsevier, Pearson Shares Fall

Marketwatch reports that Reed Elsevier was a top decliner Tuesday, down 2.8% while Pearson shares declined 0.4%. Shares in Reed Elsevier declined as analysts noted that the positions held by both companies in the U.S. educational publishing market mean the deal will be investigated by regulatory authorities, and may not close until the first half of next year.

“The market shares of Reed/Harcourt and Houghton Mifflin Riverdeep are approximately 20% and 15% and, accordingly, the transaction will be investigated,” said analysts at Numis Securities. Analysts at Bear Stearns noted: “Riverdeep has suddenly become the No. 1 U.S. schools publisher with a market share of approximately 33%, overtaking Pearson at 37% and McGraw Hill at 22%.”

Pearson Boss Falls Four in UK Media List

By way of the Bookseller, the Guardian reports that Pearson boss Marjorie Scardino has fallen four places in the Guardian’s “Media 100″, the newspaper’s power-list of the media world’s movers and shakers. She is the only book publisher in the list, Reed‘s Crispin Davis having dropped out in 2004. Placed at 41, Scardino is one below Guardian editor Alan Rusbridger, but 17 places below the Doctor Who actor David Tennant. Social networking website Facebook comes in at 100. Google chief executive Eric Schmidt – a new entry – is top of this year’s MediaGuardian 100 list.

OFT Confirms Investigation Into Pearson Acquisitions

The Bookseller reports this morning that the Office of Fair Trading has confirmed that Pearson has agreed to run Harcourt Education as a separate business until the conclusion of its investigation into the group’s purchase of the education unit previously owned by Reed Elsevier. John Fallon ,CEO of Pearson Education Asia, Europe, Middle East and Africa, said the group had anticipated the OFT’s interest: “We always knew that we would have to run the businesses separately until the OFT had time to look at the acquisition. The OFT enquiry is a matter of course in that, as Harcourt is the market leader in the UK, we fully expected that the OFT would want to look at the acquisition.”

Could Pearson WSJ Bid Break up Company?

That’s the hypothesis the Independent’s Stephen Foley puts forward in reporting about the bid to buy the Wall Street Journal by Pearson (parent company of Penguin.) For Dame Marjorie Scardino, the chief executive who once said that the Financial Times would be sold “over my dead body”, failing to make a move on the Journal may not simply mean a reversion back to the status quo. In the words of one analyst yesterday, this could be “double or quits”.

Unlike Newscorp, Pearson doesn’t have easy and available access to cash, so they need a partner (rumored to be GE.) And then there’s the issue of the FT, a competitor to the WSJ and sliding in profit value. Many of the most bullish analysts and investors believe it is only a matter of time before the company is broken up, releasing value from an auction of the Financial Times.

In the end, the biggest problem may be Pearson’s own stakeholders. First there are the FT journalists who may be resistant to a cost-cutting, job-slashing merger, undermining the point of doing a deal. And most important of all, the shareholders. One clue as to their view is that Pearson shares are down 3.6 per cent since the idea of a bid for the Journal surfaced over the weekend, with the decline accelerating yesterday.

Pearson Gets Critical Analysis

The Times’ Dan Sabbagh looks at the performance of educational publisher Pearson (parent company of Penguin) and its CEO, Dame Marjorie Scardino, over the last ten years, and wonders if it’s “unreasonable to ask whether it is time for Dame Marjorie to adopt a different strategy.” Especially because even though the focus on publishing has been good from a long-term growth standpoint, “unfortunately, so exciting is the education business that journalists fail utterly to pay any attention to it,” concludes Sabbagh. Ungrateful scribblers prefer instead to concentrate on the rest of the shooting match, which, after ten years’ hard work, looks hardly developed by comparison. Penguin and the businesses clumped around the Financial Times contribute a measly 33 per cent of profits, and the newspaper, which produced £80 million at the top of the last cycle, might manage 20 million pounds this year.

Which makes talk of unloading Penguin all the stronger for Sabbagh. “Penguin might be better off in a union with Bloomsbury or merged into a consumer-orientated media group that would not mind a stable earnings stream to offset the vicissitudes of advertising.”

Reed Trades Harcourt Education Units to Pearson

The Independent reports that Pearson has bolstered its US assessment and international text book divisions after purchasing two Harcourt units from Reed Elsevier in a $950m deal. The acquisitions of the Harcourt units, which Reed put up for sale in February, follow a spate of activity in the education publishing market with Thomson and Wolters Kluwer also exiting the market.

Pearson has snapped up Harcourt Assessment, a Texan-based exam-testing company, to bolster its existing US assessment business. The testing market has been given a fillip by the “No Child Left Behind” Act in the US that has seen education authorities invest in more stringent testing, but the sector has been hit by local difficulties. Harcourt has recently lost key contracts in the testing space due to problems marking exams. In November, Reed warned that the business would miss its annual growth target for the second consecutive year. Pearson has also purchased Harcourt Education International, an Oxford-based publisher of text books that sells into markets including the UK, Australia, New Zealand and South Africa. Pearson has previously said it wanted to expand its education publishing business internationally.

The sale of the businesses is expected to complete in stages following regulatory review by the relevant authorities where required, which is also why Reed won’t be buying any more of Harcourt’s arms – so as not to upset the reg board…

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