November 21, 2011 / 8:01 AM / in 7 years

UPDATE 2-Pearson to buy English teaching firm in China

* Offer values Global Education at $294 million

* Global Education owns or franchises 450 centres in China

* Pearson shares flat

By Paul Hoskins and Georgina Prodhan

LONDON, Nov 21 (Reuters) - British publishing group Pearson Plc agreed to buy China’s Global Education and Technology Group, which prepares students for English-language tests, for $155 million in cash, extending its reach in China from eight cities to 60.

Pearson is rapidly building on its 2009 acquisition of the Wall Street English language centres in China and has used much of the $2 billion it collected from the 2010 sale of data provider IDC for education acquisitions in China and India.

“Through organic investment and complementary acquisitions, we’re learning a lot about the very significant growth opportunities we see in China and about the value of combining our content and technology with high-quality school networks,” John Fallon, Chief Executive of Pearson’s International Education Business, said in a statement on Monday.

Global Education and Technology Group, which teaches children and adults, has a network of 450 test preparation and training centres in China, of which it owns about 115 with the remainder run as franchises.

Shares in Pearson were unchanged at 1103 pence at 0935 GMT, the only members of the European media index not in negative territory.

“As well as continuing the process of EPS upgrades from deploying cash, we see this deal as strategically positive too,” UBS analyst Alastair Reid wrote in a note.

“Pearson trades at 8x 2012e EBITDA — we view this as far too cheap for the only global player in a global structural growth industry,” added Reid, who has a “buy” recommendation and 1,450 pence target price on the stock.

Pearson said its offer of $11.006 per American depositary share valued Global Education at $294 million with almost half the cost mitigated by the Nasdaq-listed group’s estimated $139 million cash balance.

Shares in Global Education closed almost 28 percent higher at $5.37 on Friday, taking their gains over the last three trading sessions to 60 percent.

Pearson, which also owns the Financial Times and Penguin books, runs the world’s biggest educational business, which brings in the bulk of its revenues.

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