Pearson puts Mergermarket on block
LONDON: British publisher Pearson Plc put its Mergermarket news service on the block on Friday while insisting that it intended to hang on to the Financial Times newspaper.
Chief executive John Fallon said that Mergermarket, which reports M&A news and has annual sales of about £100 million ($153 million), ‘‘does not have a place in a group that is increasingly focused on education, digital services and emerging markets.
‘‘While we are clear that the Financial Times itself is a strong business in its own right, and one that has a very important role to play in our emerging professional learning strategy, we can’t see Mergermarket forging similar strategic or operational links with our educational company,’’ he said.
Banking sources said that Mergermarket could fetch a price of £300 million ($460 million), while analysts said that a sale would increase speculation that the Financial Times Group, which includes a stake in The Economist, could be broken up and sold off.
Fallon, however, reiterated that the FT remained a ‘‘valued and valuable part’’ of Pearson.
‘‘The Financial Times is not for sale, there has been no process or any discussions about selling the FT, and there have been no approaches regarding the FT,’’ he told reporters on Friday. ‘‘The announcement regarding Mergermarket dose not change in any way the position regarding the Financial Times.’’
Private equity firms that could be interested in Mergermarket include General Atlantic, Silverlake, Bridgepoint, Hellman and Friedman, Warburg Pincus, CVC, KKR and Apax Partners, the banking sources said.
Trade rival McGraw Hill Financial, which lost to Pearson in a 2006 bid battle for Mergermarket, could still be interested in the business, industry advisers said, adding that other interested parties could include data players such as Thomson Reuters and Bloomberg.
Both Bloomberg and a spokeswoman for Thomson Reuters declined to comment on Friday. McGraw Hill did not respond immediately to a request for comment.
Fallon, who replaced Marjorie Scardino as chief executive at the beginning of the year, is reorganising Pearson to focus on fast-growing economies and digital services, rather than Europe and North America, where austerity measures are hitting public spending.
The strategy has increased speculation that the Financial Times will eventually be sold, and bankers have been looking for ways to persuade the company to do a deal, saying that selling the group in parts would maximise value.
Pearson, which makes about 80% of its profit when the education market peaks in the second half, reported adjusted first-half earnings down by a third.
The fall, exacerbated by restructuring charges, was slightly deeper than the market expected.
Fallon said the market trends that the reorganisation would address ‘‘are continuing.
‘‘In general, good growth in our digital, services and developing-market businesses continues to offset tough conditions for traditional publishing,’’ he said.
Pearson said that adjusted earnings per share fell 4.9 pence to 9.9 pence, including restructuring charges, on sales up 5% at constant rates to £2.8 billion ($4.3 billion).
Analysts were expecting sales of £2.7 billion and adjusted earnings per share of 10.6 pence, according to a Thomson Reuters I/B/E/S poll.
The company expects the restructuring to cost about £150 million this year and adjusted earnings per share, excluding those costs, in 2013 to be broadly level with the 82.6 pence posted in 2012.
Pearson said it would pay an interim dividend of 16 pence a share, up 7% on a year ago.