Nikkei buys Financial Times from Pearson for $1.29bn
Japan’s Nikkei has bought the Financial Times and associated business titles from Pearson for £844m.
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The transaction was announced via an e-mail to Nikkei’s subscribers, soon confirmed in a statement by Pearson chief executive John Fallon.
Alex Springer had been said to be leading the running for the purchase, according several reports, including the Financial Times' own story on talks.
Fallon said the agreement did not include FT Group’s London property at One Southwark Bridge nor Pearson’s 50% stake in The Economist Group.
A contribution of around £90m will be made to the Pearson group pension plan, which was thought to have been a sticking point in a potential sale. In addition, Pearson has committed to fund the pension plan to self-sufficiency in the near term.
“Pearson has been a proud proprietor of the FT for nearly 60 years," Fallon wrote. "But we’ve reached an inflection point in media, driven by the explosive growth of mobile and social. In this new environment, the best way to ensure the FT’s journalistic and commercial success is for it to be part of a global, digital news company."
"Nikkei has a long and distinguished track record of quality, impartiality and reliability in its journalism and global viewpoint. The Board and I are confident that the FT will continue to flourish under Nikkei’s ownership”.
He said after the sale of the division, which contributed £334m of sales and £24m of adjusted operating income to Pearson in the last full year, the group will now be totally focused on its global education strategy.
Established in 1876 and with news bureaus in 26 locations, Nikkei's operations range from books, magazines to digital media, database services, broadcasting and other activities such as economic/cultural events.
Chairman and CEO of Nikkei, Tsuneo Kita, said: “I am extremely proud of teaming up with the Financial Times, one of the most prestigious news organizations in the world. Our motto of providing high-quality reporting on economic and other news, while maintaining fairness and impartiality, is very close to that of the FT. We share the same journalistic values. Together, we will strive to contribute to the development of the global economy.”
It’s hardly the first time the rumour mill has spun about a possible FT sale, but there was a sense that this time it was really going to happen.
“The issue of Pearson’s large pension deficit that had hampered previous talks appears to have been resolved with a contribution to the Pearson investment plan of around £90m,” said Jasper Lawler, Market Analyst at CMC Markets UK. “Just three days ago a spokesman for Pearson said a sale of the FT was not a part of its strategy. Perhaps the offer of £844m plus pension contribution was enough to trigger a strategy rethink.
Despite the 'trophy' valuation fetched by the FT - at 2.5 sales and 35 times EBITA - analysts at Nomura were unenthused telling clients: "We remain Neutral on Pearson and prefer RELX as the company still faces challenges in terms of trends in testing, increased competition from traditional rivals, weak enrolments and limited disclosure around the digital upside opportunity."
As of 15:13 shares in Pearson were 1.49% higher to 1,227p.