Shares in Pearson (LON:PSON) have fallen into the red in today’s session, with investors having reacted negatively to news that the company has inked a deal to sell its Wall Street English business. The sale, which values the unit at $300 million, however, is expected to only bring in $100 million.
As of 10:24 GMT, Pearson’s share price had given up 1.83 percent to 695.08p, underperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.32 percent higher at 7,433.33 points. The group’s shares have lost more than 11 percent of their value over the past year, and are down by some 15 percent in the year-to-date.
Wall Street English sale
Pearson announced in a statement today that it had agreed the sale of Wall Street English to a consortium consisting of funds affiliated with Baring Private Equity Asia and CITIC Capital. While the transaction is expected to generate gross cash of about $300 million, the improvement in the group’s net debt is expected to be approximately $100 million. The transaction is expected to close in the first half of 2018 subject to regulatory approval.
“The sale of Wall Street English is part of our continued effort to focus on a smaller number of bigger opportunities in global education and to become simpler and more efficient,” John Fallon, Pearson’s chief executive, commented in the statement.
Analysts, however, have been downbeat on the sale, with Citi A.M. quoting Liberum as calling the $100 million a ‘paltry sum’. The comments came as the broker reiterated its ‘sell’ stance on the blue-chip publisher, valuing the shares at 330p.
The sale comes after last month, Deutsche Bank reaffirmed the FTSE 100 group as a ‘sell,’ pointing to structural challenges for the company.