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Pearson exits news biz as it sells Economist stake for $731 mn
The Agnelli family now has a 43.4 per cent stake in The Economist, with the remainder snapped up by other shareholders including the Cadbury, Layton, Rothschild and Schroder families.
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The deal effectively ends London-based Pearson’s role in the news publishing business after more than 50 years, following its sale of the Financial Times Group to Japan’s Nikkei for $1.3bn.
Liberum analyst Ian Whittaker said the price was higher than was speculated, with analysts expecting an amount nearer to £400m. The Economist group reported £60m in operating profit on sales of £328m in the year through March.
This has piqued rumors that Pearson might also look to sell its 47 percent stake in Penguin Random House, a book publishing giant that arguably falls outside of the company’s educational focus. The Agnellis’ stake in The Economist Group now stands at 4.72%.
Exor added that, subject to a shareholder vote, the governance rules of The Economist would be amended to limit the voting powers of any single shareholder to 20 per cent, and to ensure that no one individual or company can own more than 50 per cent of the groups shares.
The transaction will include amendments to the Group’s articles, which will safeguard the independence of the company and crucially, the editorial independence of The Economist. The proceeds will give Pearson, the world’s largest education company, resources to find growth in online-education materials and services.
“We have always admired the editorial integrity and thoroughly global outlook that are the hallmarks of The Economist’s success”, said John Elkann, Exor’s chief executive, who also sits on the board of Rupert Murdoch’s News Corp.
The flagship The Economist, which has been edited in London since 1843, has a circulation of around 1.6 million.
Though there is no new player involved in this deal, Pearson having sold its shares to other existing shareholders in The Economist Group in a deal worth £469 million.
Exor owns two Italian newspapers, La Stampa in Turin and the national daily Corriere della Sera.
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“With their decision to sell, the board’s priority was to secure the independence of the ownership of the Group and the continued editorial independence of The Economist“.