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Business News/ Companies / Pearson said to consider sale of Financial Times amid approaches
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Pearson said to consider sale of Financial Times amid approaches

A sale may value the business at as much as 1.6 billion dollar, sources said

While there is no formal process under way, the Financial Times may draw interest from media companies such as Axel Springer SE as well as investors in Europe, the Middle East and Asia, sources said. Photo: BloombergPremium
While there is no formal process under way, the Financial Times may draw interest from media companies such as Axel Springer SE as well as investors in Europe, the Middle East and Asia, sources said. Photo: Bloomberg

London: Pearson Plc is exploring a sale of the Financial Times after receiving interest from potential buyers, according to people familiar with the matter.

London-based Pearson is sounding out possible bidders for the salmon-coloured newspaper, said the people, who asked not to be identified because the deliberations are confidential. A sale may value the business at as much as £1 billion ($1.6 billion), two of the people said.

While there is no formal process under way, the Financial Times may draw interest from media companies such as Axel Springer SE as well as investors in Europe, the Middle East and Asia, the people said.

Pearson shares rose more than 5% intraday before closing 1.6% lower. The company has a market value of about £10.3 billion.

Discussions over a disposal, which have been on and off for years, have heated up as chief executive officer (CEO) John Fallon focuses on tackling a slowdown in the education unit weighed on by declining US college enrollments and falling textbook sales. No final decision has been made and Pearson may decide to keep the newspaper, the people said.

Representatives for Pearson and Axel Springer declined to comment.

‘Trophy asset’

Pearson doesn’t break out financial details for the FT, which is part of the professional education unit that reported £1.15 billion in 2014 revenue. The publisher is scheduled to report interim results on 24 July.

“It’s a classic trophy asset, it has cachet," Alex DeGroote, an analyst at Peel Hunt, said in a phone interview. While DeGroote said he does see Pearson as a seller of the FT, he added that the mooted price would be “an extraordinary valuation."

“If Pearson can get £1 billion for the FT I will eat my hat," he said.

First published in 1888 as a four-page newspaper, the FT’s circulation reached 720,000 last year, with digital subscriptions accounting for 70% of the total. In a move to make more money from online readers, the newspaper in February tweaked its paywall system, moving away from a metered model that allows readers to view a few free articles every month before requiring them to pay.

Last November, chief financial officer Robin Freestone said a sale of the FT wasn’t top priority for Pearson.

“Do we have to own them? No. But actually it’s one of those brands which, you know, you don’t sell lightly," Freestone, who will step down next month, told an investor conference on 19 November.

German newspaper publisher Axel Springer is in talks to combine with German broadcaster ProSiebenSat.1 Media to strengthen their push into digital media, people familiar with the matter said earlier this month. A deal would unite Springer’s Bild-Zeitung tabloid and Die Welt newspaper with the ProSieben and Sat.1 commercial TV channels. Bloomberg

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Published: 21 Jul 2015, 10:40 AM IST
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