* Says M&A news service does not fit group's education focus
* Mergermarket could fetch 300 mln stg - sources
* Pearson CEO says FT not for sale
* Shares hit 12-year high
By Paul Sandle and Anjuli Davies
LONDON, July 26 British publisher Pearson
put its Mergermarket news service on the block on
Friday while insisting that it intends to hang on to the
Financial Times newspaper.
Pearson Chief Executive John Fallon said that Mergermarket,
which reports M&A news and has annual sales of about 100 million
pounds ($153 million), does not have a place in a group that is
increasingly focused on education, digital services and emerging
"While we are clear that the Financial Times itself is a
strong business in its own right, and one that has a very
important role to play in our emerging professional learning
strategy, we can't see Mergermarket forging similar strategic or
operational links with our educational company," he said.
Banking sources said that Mergermarket could fetch a price
of 300 million pounds ($460 million), while analysts said that a
sale would increase speculation that the Financial Times Group,
which includes a stake in The Economist, could be broken up and
Fallon, however, reiterated that the FT remains a "valued
and valuable part" of Pearson.
"The Financial Times is not for sale, there has been no
process or any discussions about selling the FT, and there have
been no approaches regarding the FT," he told reporters on
"The announcement regarding Mergermarket does not change in
any way the position regarding the Financial Times."
Private equity firms that could be interested in
Mergermarket include General Atlantic, Silverlake, Bridgepoint,
Hellman and Friedman, Warburg Pincus, CVC, KKR and Apax
Partners, the banking sources said.
Trade rival McGraw Hill Financial, which lost to
Pearson in a 2006 bid battle for Mergermarket, could still be
interested in the business, industry advisers said, adding that
other interested parties could include data players such as
Thomson Reuters and Bloomberg.
Bloomberg, Thomson Reuters and McGraw Hill Financial all
declined to comment.
Pearson has appointed J.P. Morgan Cazenove as an adviser on
the sale, which Fallon said had not been triggered by an
Shares in Pearson rose to a 12-year high of 13.70 pounds on
Friday after it announced the sale along with first-half
results. They were trading up 8.3 percent at 13.56 pence by 1311
GMT, topping the FTSE 100 leaderboard.
Fallon, who replaced Marjorie Scardino as chief executive at
the beginning of the year, is reorganising Pearson to focus on
fast-growing economies and digital services, rather than Europe
and North America, where austerity measures are hitting public
The strategy has increased speculation that the Financial
Times will eventually be sold, and bankers have been looking for
ways to persuade the company to do a deal, saying that selling
the group in parts would maximise value.
UBS analyst Alastair Reid said the initiation of the sale of
Mergermarket was encouraging. "We believe this could also
refocus investor attention on a potential sale of other parts of
the FT Group," he said.
Pearson, which makes about 80 percent of its profit when the
education market peaks in the second half, reported adjusted
first-half earnings down by a third. The fall, exacerbated by
restructuring charges, was slightly deeper than the market
Fallon said the market trends that the reorganisation would
address are continuing. "In general, good growth in our digital,
services and developing-market businesses continues to offset
tough conditions for traditional publishing," he said.
Pearson said that adjusted earnings per share fell 4.9 pence
to 9.9 pence, including restructuring charges, on sales up 5
percent at constant rates to 2.8 billion pounds ($4.3 billion).
Analysts were expecting sales of 2.7 billion pounds and
adjusted earnings per share of 10.6 pence, according to a
Thomson Reuters I/B/E/S poll.
The company expects the restructuring to cost about 150
million pounds this year and adjusted earnings per share,
excluding those costs, in 2013 to be broadly level with the 82.6
pence posted in 2012.
It said it would pay an interim dividend of 16 pence a
share, up 7 percent on a year ago.