LONDON — Publisher and education company Pearson said Wednesday that it has agreed to sell its stake in The Economist Group for 469 million pounds, or $731 million, payable in cash. The group includes The Economist newspaper; Economist.com; the Economist Intelligence Unit; CQ Roll Call, a news and analysis service for Capitol Hill, and TVC, a London-based digital marketing agency.
Exor SpA, which is controlled by the Agnelli family, has agreed to buy 27.8 percent of The Economist Group’s ordinary shares for 227.5 million pounds, or $354.4 million, and all of the group’s B special shares for 59.5 million pounds, or $92.7 million. The deal takes Exor’s shareholding in The Economist Group to 43.4 percent, from its previous 4.7 percent stake, and will make Exor the group’s single largest shareholder.
As reported, last month Exor said that it was in discussion about the possibility of increasing its investment in the group. Alongside Exor, the group’s shareholders include Lynn Forester de Rothschild and Evelyn de Rothschild, in addition to the Schroder and Cadbury families, who had all been floated as possible names who could increase their respective stakes in the group.
John Elkann, chairman and chief executive officer of Exor and a non-executive director of The Economist, commented that he and the group “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 digitization of the media industry, under the leadership of [The Economist’s editor-in-chief] Zanny Minton Beddoes and [The Economist Group’s group chief executive] Chris Stibbs.” Elkann added that Exor is “delighted to affirm our role as one of the group’s long-term supportive shareholders, along with the Cadbury, Layton, Rothschild and Schroder families and other individual stable investors.”
Pearson’s remaining ordinary shares will be repurchased by The Economist Group for 182 million pounds, or $283.5 million.
Pearson said it will use the proceeds of the sale for general corporate purposes and investment in its global education strategy. John Fallon, Pearson’s chief executive, commented: “Pearson is proud to have been part of The Economist’s success over the past 58 years and our shareholders have benefited greatly from its growth.” He added that the firm is now “100 percent focused on our education strategy.”
The transaction is subject to regulatory approvals both by a 75 percent majority of The Economist Group’s shareholders and the group’s independent trustees. Exor said in its statement that the transaction has the “unanimous support of The Economist board of directors.” The deal is expected to close during the fourth quarter of 2015.
Exor also said that subject to a shareholder vote, the Economist’s Articles of Association will be amended to limit 20 percent of the voting powers to any single shareholder, and to ensure that no one individual or company can own more than 50 percent of the group’s shares.
Exor noted that the publication’s editorial values “will continue to be overseen by its independent trustees.”