Pearson sells US K12 textbook arm for $250m
Education publishing giant Pearson has announced the sale of its US K-12 courseware business to private equity firm Nexus Capital Management for $250 million as it shifts its focus from textbooks to digital.
According to a statement, Nexus will pay an initial $25 million and a further $225 million by way of a vendor note due in the next three to five years for the business, which provides textbooks and instructional resources to help teachers and students at every stage of K-12 learning in the US.
“We will now be better placed to focus on the areas in which we can best help students to be successful”
Following the repayment of the vendor note, Pearson will be entitled to 20% of all future cash flows to shareholders as well as net proceeds if the division is sold and the market improves.
Pearson’s chief executive John Fallon said school publishing in the US has been an important part of Pearson for many years, but that the sale frees up the company to focus on a digital-first strategy that will drive its future growth.
“We’re pleased to have found new owners who are committed to its future, and we wish it every success,” he added.
“Through our assessment, virtual school, advanced placement and career and technical education programs, we will still serve schools across America and we will now be better placed to focus on the areas in which we can best help their students to be successful in their studies and future careers.”
The transaction is expected to be complete at the end of the first quarter of 2019.
However, the company’s concerns over its US courseware business extends to higher education also, with a financial update shared in January warning that revenue could fall as much as 5% in 2019 as “underlying pressures continue”.