Pearson Plc (PSON) agreed to acquire Grupo Multi, an English-language training company in Brazil, for about 440 million pounds ($721 million) as the London-based company accelerates growth in its education business.
Pearson, which also publishes the Financial Times newspaper, will pay for Grupo Multi in cash and assume 65 million pounds of debt, it said in a statement today. The deal is the biggest acquisition for Pearson since it bought Harcourt Education from Reed Elsevier Plc in a $950 million deal in 2007, according to data compiled by Bloomberg.
Brazil is the one of the largest English-language education markets, worth about 2 billion pounds, Pearson said. Pearson is spending 150 million pounds on reorganizing this year to speed growth in emerging markets and digital services, as a slowdown in some large textbook markets hurts profit.
The U.K. company on Oct. 30 forecast full-year operating profit excluding some items will fall from 2012, citing slowing North American sales for college textbooks as lower freshman enrolments and bookstore purchasing weakened demand.
Pearson shares were unchanged at 1,343 pence at 9:34 a.m. in London trading, giving the company a 13 percent advance this year and a market value of 11 billion pounds.
Pearson is buying Grupo Multi from the Martins family, which has a 78 percent stake, and investment firm Kinea. The transaction is expected to be complete in the first half of 2014 and Morgan Stanley is acting as financial adviser to Pearson. Grupo Multi had operating profit of 42 million pounds in 2012 and gross assets of 200 million pounds at the end of last year, according to Pearson.
The acquisition is “highly consistent with Pearson’s core competencies in English-language contents” and will be easy to integrate, analysts at Kepler Cheuvreux said in a note today. In a separate note, JPMorgan said Grupo Multi is a “fast-growing asset” that will be “slightly earnings enhancing” from next year.
In 2012, education accounted for 76 percent of Pearson’s sales, according to its annual report.
Pearson last week agreed to sell financial-data provider Mergermarket Group to private equity firm BC Partners for 382 million pounds.
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