Shares in Pearson plc (LON:PSON) headed lower early on Monday after the publishing and education giant revealed it has sold off its Wall Street English language teaching unit.
A group of funds linked to Baring Private Equity Asia and Citic Capital have stumped up US$300mln for the division, which Pearson bought for US$240mln seven years ago.
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The deal will only help the former Financial Times owner to cut its debt by US$100mln or so though due to various costs and the fact that US$150mln of cash will stay with the language-training business.
Pearson – which has struggled recently and issued a string of profit warnings – said the sale was part of its strategy to focus on a “smaller number of bigger opportunities in global education”.
It announced back in February that it was looking for a strategic partner for Wall Street English as part of a strategic review launched after it reported a record £2.6bn loss.
However, the FTSE 100 group has decided that a full disposal was the option “best aligned” with its streamlining strategy.
Today’s is the latest in a series of disposals by Pearson as looks to become a more education-focused firm as opposed to a broader media and publishing group.
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In 2015 it sold off the Financial Times and its stake in the Economist magazine, while earlier this year it got rid of tis interest in Penguin Random House.
City broker Liberum reckons the fact that net debt will only be reduced by a “paltry” US$100mln will likely disappoint investors who “would have been looking for bigger cash proceeds”.
“It also explains why the business was able to be sold at such a high headline figure,” added analyst Ian Whittaker.
Pearson shares fell 1.6% to 697p early on Monday morning.