Shares in Pearson (LON:PSON) have fallen deep into the red in mid-morning trade, having jumped earlier in the session, as the company announced that it was selling a 22-percent stake in the Penguin Random House Venture. The blue-chip company, which has suffered following a string of profit warnings, noted that it would return £300 million to shareholders.
As of 09:24 BST, Pearson’s share price had lost 3.77 percent to 664.50p, underperforming the broader UK market, with the benchmark FTSE 100 index currently 0.52 percent worse off at 7,331.54 points. The group’s shares have lost just under 30 percent of their value over the past year, and are down by nearly 17 percent in the year-to-date.
Pearson announced in a statement today that it had agreed to sell a 22-percent stake in Penguin Random House to Bertelsmann. The FTSE 100 company said that the deal would allow it to generate net proceeds of approximately $1 billion to shore up its balance sheet, and return £300 million of surplus capital to investors via a share buyback. Pearson will retain a 25-percent stake in Penguin following the deal.
“Combining Penguin with Random House has proved to be a great publishing success, as well as enabling some big cost savings,” Pearson’s chief executive John Fallon commented in the statement, adding that today’s deal enabled the company “to realise a significant amount of the value we’ve helped create”.
The Financial Times further quoted Fallon as saying that the Penguin stake sale would help the company accelerate its transition to a digital education company.
“It’s challenging, it’s difficult,” he pointed out. “We are convinced there is a future in digital learning we need a strong balance sheet to see us through the digital transformation.”