Pearson is set to raise $1bn (€877m) from the sale of a 22% stake in Penguin Random House to majority owner Bertelsmann, in the British group’s latest bid to rebuild following a string of profit warnings.
Hit by a sharp downturn in its biggest markets, Pearson has sold off some of its best-known assets in recent years including the Financial Times and The Economist to enable it to invest in its core business of education. The 173-year-old group said that it would now reduce its stake in the world’s biggest consumer book publisher to 25% from 47%, enabling it to free up cash to return to shareholders and bolster its balance sheet. Shares fell 6% as analysts processed what the deal would mean for future dividends.
“Today’s deal enables us to realise a significant amount of the value that we’ve helped to create (at Penguin Random House) while continuing to be part of what is the world’s biggest and best trade publisher,” said chief executive John Fallon.
“We’ll be using the proceeds to maintain our strong balance sheet, to invest in the ongoing digital transformation of Pearson and return £300m in excess capital to shareholders,” he said.
Established as a joint venture between Pearson and Bertelsmann in 2013, Penguin Random House has a list of authors including John Grisham and Paulo Coelho. Bertelsmann CEO Thomas Rabe said the company had achieved its goal of securing a 75% majority holding.
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