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Pearson share price: Group offloads US K12 courseware business

Pearson (LON:PSN) has inked a deal to offload its K12 courseware business in the US, the blue-chip publisher has said. The news comes after the company updated investors on its performance last month, flagging full-year profit within its guidance range, while cautioning  that revenue at its US higher education courseware business had declined.

Pearson’s share price fell in the previous session, giving up 0.95 percent to 920.60p, underperforming the broader UK market, with the benchmark FTSE 100 index gaining 39.67 points to close 0.55 percent higher at 7,236.68. The blue-chip publisher’s shares have added more than 31 percent to their value over the past year, as compared with a largely flat Footsie.

Pearson offloads K12 business

Pearson announced in a statement this morning that it was selling its US K12 courseware business to Nexus Capital Management for headline consideration of $250 million. Total proceeds comprise an initial cash payment of $25 million and an unconditional vendor note for $225 million expected to be repaid in three to seven years. The deal is expected to complete at the end of the first quarter of the year, with the cash proceeds to be used for general corporate purposes. 

“School publishing in America has been an important part of Pearson for many years,” the blue-chip publisher’s chief executive John Fallon commented in the statement, adding that the sale freed up the company to focus on its digital first strategy.

The business generated around £364 million of revenue and approximately £20 million of adjusted and statutory operating profit last year.

Analysts on blue-chip publisher

Shore Capital reaffirmed Pearson as a ‘hold’ last week, without specifying a price target on the shares. According to MarketBeat, the FTSE 100 company currently has a consensus ‘hold’ rating and an average price target of 756p.

As of 08:21 GMT, Monday, 18 February, Pearson plc share price is 920.60p.

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