LONDON (Reuters) - Britain’s Pearson brought an end to its near 60-year ownership of The Economist on Wednesday, agreeing to sell its 50 percent stake in a deal that makes Italy’s Agnelli family the largest shareholder in the weekly title.
The 469 million pound ($731 million) deal had been expected after Pearson sold the Financial Times newspaper last month to Japan’s Nikkei to focus on its education business.
The Economist, a famously opinionated advocate of free markets, said the deal would be structured in such a way as to guarantee its editorial independence.
Pearson said it would sell its stake to Exor, a holding vehicle for the Agnelli family, and to The Economist Group.
To finance the purchase The Economist, founded in 1843, said it would sell the Economist building in London’s exclusive St James’s district, its home since the 1960s.
“The board’s priority was to secure the independence of the ownership of the Group and the continued editorial independence of The Economist,” said Rupert Pennant-Rea, the chairman of The Economist Group.
“The strength of the Group’s balance sheet meant that we could reorganize our shares so as to reinforce our editorial independence and benefit our shareholders.”
While many publications have been convulsed by the rapid shift of both readers and advertisers online, the Economist has grown in strength, targeting executives and policymakers with authoritative stories to boast a paid circulation of 1.6 million a week.
Under the terms of the deal, Exor will pay 287 million pounds to increase its stake to 43.4 percent from 4.7 percent and The Economist Group will pay 182 million pounds to repurchase Pearson’s remaining ordinary shares.
The other shareholders will see their holdings rise due to the group buying back the remaining shares from Pearson, with Rothschild the second-biggest investor at around 27 percent.
Exor added that, subject to a shareholder vote, the governance rules of The Economist would be amended to limit the voting powers of any single shareholder to 20 percent, and to ensure that no one individual or company can own more than 50 percent of the group’s shares.
Exor, which also holds a controlling stake in carmaker Fiat Chrysler Automobiles, among others, has been investing to diversify its portfolio away from the capital intensive and cyclical automotive business.
“We are convinced of the huge potential that still lies ahead and particularly in The Economist’s ability to seize the many development opportunities linked to the digitization of the media industry,” John Elkann, the CEO of Exor and a scion of the Agnelli family, said in the statement.
($1 = 0.6419 pounds)
Additional reporting by Agnieszka Flak in Milan; Editing by Susan Fenton