US Regulator Clears Pearson's $4.6 Billion Simon & Schuster Acquisition

Contract to sell reference and business & professional divisions to Hicks, Muse, Tate & Furst will not proceed.

Pearson plc, the international media group, announces that the US Department of Justice has cleared Pearson's $4.6bn acquisition of the Simon & Schuster education, reference and business & professional publishing businesses from Viacom Inc. Pearson expects to complete the transaction on 27 November and will merge the Simon & Schuster education business with Addison Wesley Longman to create Pearson Education, the world's leading educational publisher.

After an extensive review of the transaction by the Department of Justice, Pearson has agreed to sell certain overlapping products resulting from the merger of the two businesses. Pearson will sell 55 out of a total of 35,000 higher education titles and Simon & Schuster's elementary science programme, which duplicates a programme Pearson Education already has in development for launch in the school adoption cycle starting next April. The assets Pearson has agreed to divest generate annual revenues of around $35m, less than 2% of Pearson Education's total 1997 pro forma revenues. The sale process will begin immediately.

On July 3, Hicks, Muse, Tate & Furst, the US private equity firm, signed a contract with Pearson to buy the Simon & Schuster reference and business & professional publishing divisions for $860m in cash. Hicks Muse subsequently sought to re-negotiate the price, financing and timing agreed in the contract. Discussions between Pearson and Hicks Muse have been terminated and Hicks Muse will not now purchase the reference and business & professional divisions.

On completion of the acquisition from Viacom, the Macmillan computer publishing business, which accounts for around 45% of the revenues of the reference and business & professional divisions, will become part of the technology publishing group within Pearson Education's US Higher Education business. The general and library reference and business & professional publishing operations will be brought together into one business unit within Pearson Education.

Marjorie Scardino, Pearson's chief executive, said:

'Now we can get on with the job of creating the world's best education business. Pearson Education will have a top class management team, a talented and committed staff and many of the best imprints and new media products in education. The immediate task is to make the most of these great businesses so that we can create the value and deliver the earnings we have promised. We are eager to seize the chance to play our full role in meeting the growing demand to learn in both America and around the world.'

Notes

In 1997, the Simon & Schuster education, reference and business & professional publishing divisions had sales of $1.9bn and operating profits of $246m. In 1997, Addison Wesley Longman made sales of $924m and operating profits before exceptionals of $116m.

Pearson Education will have leading positions in every major sector of educational publishing - elementary and secondary school, higher education, professional education, English Language Teaching, and educational technology. Pearson Education will be well placed to capitalise on the exciting growth opportunities both in the US and international markets. Its highly respected imprints will include, among others, Prentice Hall, Scott Foresman, Addison-Wesley, Allyn & Bacon, Computer Curriculum Corporation (CCC) and Modern Curriculum Press.

Pearson announced on 3 July that Hicks, Muse, Tate & Furst had agreed to buy the Simon & Schuster reference and business & professional divisions for $860m. The reference and business & professional divisions consist of Macmillan's computer, general and library reference programmes, which include a wide range of leading computer, technical and professional titles and 'solutions' oriented books, periodicals and distance learning products focusing on finance, business management and healthcare.

For further information

John Fallon

 

Pearson plc

 

+ 44 171 411 2310