Agnelli Family Raises Stake in Economist as Pearson Exits

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Pearson explores sale of The Economist

The Economist on sale at a kiosk in London.

Photographer: Simon Dawson/Bloomberg

Italy’s billionaire Agnelli family emerged as the largest investor in the Economist after Pearson Plc sold its half in the 172-year-old magazine cherished by the political and business elite for 469 million-pounds ($731 million).

Exor SpA, through which the family controls carmaker Fiat Chrysler, agreed to pay 287 million pounds, boosting its share in the The Economist Group to 43.4 percent from 4.7 percent, the companies said in statements on Wednesday. The sale also raises the stake held by the Rothschild family to 26 percent from 21 percent, while Pearson’s remaining holding will be repurchased by the Economist for 182 million pounds.

Under 39-year-old Chief Executive Officer John Elkann, the Agnelli industrial clan that’s controlled Fiat for more than a century is using high-profile assets to boost its clout in English-speaking cultures. The Economist deal solidifies ties with other affluent families, from the Cadburys and Rothschilds to the Schroder banking dynasty, which also own stakes in the magazine group.

“The families who own these stakes see themselves as protectors of the Economist and its values,” said Ian Whittaker, a media analyst at Liberum Capital in London. “They see themselves as guarantors of the legacy.”

The sale includes changes to Economist Group articles that stipulate a voting cap of 20 percent for any single investor and a rule that no one person or company can own more than 50 percent of the group’s shares.

The Economist Group includes the Economist magazine, the Economist Intelligence Unit and titles such as CQ Roll Call. The Economist Group reported 60 million pounds in operating profit on sales of 328 million pounds in the year through March.

Exor Investments

The Economist, which has been edited in London since 1843, has a circulation of 1.6 million. Pearson said July 25 that discussions with The Economist Group’s board and trustees about a sale of its stake were underway.

The deal effectively ends London-based Pearson’s role in news publishing after more than 50 years, following its sale of the FT Group to Japan’s Nikkei Inc. for $1.3 billion. Proceeds from the sale give Pearson Chief Executive Officer John Fallon extra firepower to turn around the company’s education business.

Pearson fell 0.8 percent in London trading at 10 a.m., giving the company a market value 9.6 billion pounds.

The proceeds will give Pearson, the world’s largest education company, resources to find growth in online-education materials and services. The company has recently lost testing contracts in the U.S. and its first-half profit declined as demand for textbooks continued to shrink and fewer students enrolled in college.

Turin Daily

The deal also equips Exor with a new investment to reduce its dependence on the auto industry. Exor this month agreed to buy reinsurer PartnerRe Ltd. for about $6.9 billion in its biggest single acquisition in more than a century.

“Our strong belief in the merits of this investment is all the greater given The Economist’s decision to join us, by investing in its own shares,” Elkann said in Wednesday’s statement.

Exor also controls Turin daily La Stampa through Fiat and the carmaker is also the biggest investor in RCS Media Group SpA, which publishes Italy’s biggest newspaper Corriere della Sera. Under family leader Elkann, Exor’s shares have risen more than seven times since the company was formed in 2009 by combining two holding companies. Elkann is also a board member of Rupert Murdoch’s News Corp.

The Economist’s purchase of shares from Pearson will be partly financed from the sale of its London headquarters, which has housed the news operation since the 1960s.

John Micklethwait, current editor-in-chief of Bloomberg and former editor-in-chief of the Economist, still owns shares in The Economist Group and was not involved in the reporting and editing of this story.

Advisers on the sale include Ondra Partners, Citigroup Inc. and Evercore Partners Inc.

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