Pearson exits news by selling ‘Economist' stake to Agnellis

London: Pearson Plc agreed to sell its stake in the 172-year-old Economist magazine in a £469 million ($731 million) deal with Exor SpA, completing an exit from business publishing after disposing of the Financial Times newspaper last month.

Exor, the Agnelli family’s investment company that controls car maker Fiat Chrysler, agreed to pay £227.5 million for 27.8% of The Economist Group’s ordinary shares and all of the B special shares for £59.5 million. Pearson’s remaining ordinary shares will be bought by The Economist Group for £182 million, Pearson said on Wednesday in a statement.

The deal effectively ends London-based Pearson’s role in the news publishing business after more than 50 years, following its sale of the FT Group to Japan’s Nikkei Inc. for $1.3 billion. Proceeds from the sale give Pearson chief executive officer (CEO) John Fallon extra firepower to turn around the company’s education business.

“Pearson is now 100% focused on our global education strategy,” Fallon said in the statement. “The world of education is changing rapidly and we see great opportunity to grow our business.”

The Economist Group includes the Economist magazine, the Economist Intelligence Unit and titles such as CQ Roll Call. The Economist Group reported £60 million in operating profit on sales of £328 million in the year through March.

Exor investments

The Economist, which has been edited in London since 1843 and is read by many political and business leaders, has a circulation of 1.6 million. Pearson said on 25 July that discussions with The Economist Group’s board and trustees about a sale of its stake were under way.

The proceeds will give Pearson, the world’s largest education company, resources to find growth in online-education materials and services. The company has recently lost testing contracts in the US and its first-half sales stalled as demand for textbooks continued to shrink and fewer students enrolled in college.

Exor also owns investments Italian newspaper La Stampa. Fiat is also the biggest investor in RCS Media Group SpA, which publishes Italy’s biggest newspaper Corriere della Sera. John Elkann, 39, the CEO of Exor, is also a board member of Rupert Murdoch’s News Corp.

Pearson’s 47% stake in book-publishing venture Penguin Random House may also be up for sale. Beginning in October, Pearson has the option to divest the holding under an agreement with Germany’s Bertelsmann SE, which owns the remainder. People familiar with the matter said last year that Bertelsmann intended to buy all or part of the stake as soon as this year.

John Micklethwait, current editor-in-chief of Bloomberg and former editor-in-chief of the Economist, still owns shares in The Economist Group and was not involved in the reporting and editing of this story. Bloomberg