Pearson Buys Sistema Learning Unit for $499 MillionJonathan Browning and Serena Saitto
Pearson Plc, the U.K.-based education and publishing company, agreed to buy a unit of Sistema Educacional Brasileiro SA for 888 million reais ($499 million) in cash to tap growth in Brazil.
Pearson will acquire SEB’s learning systems division, which provides teaching methods, training and materials, the U.K. publisher said in a statement today. The Zaher family, which owns 70 percent of SEB, will retain the school and higher education institutions of the business and become a “major customer” of Pearson, the company said.
The acquisition expands Pearson’s education presence in Latin America’s largest economy, which is growing at the fastest rate in 15 years. Pearson gets about 65 percent of its revenue from education and said today that Brazil is one of the world’s largest education markets with 56 million students and an educational materials market valued at about $2 billion.
“Given the size and growth prospects of its education sector, Brazil has been a focus for Pearson for some time,” John Fallon, chief executive of Pearson’s international education business, said in the statement. SEB will “provide a platform to build a more significant Latin American business,” he said.
SEB was founded in 1963, offering preparation for college-admission tests. It expanded into secondary education in 1973 and into the post-secondary market in 1999. It first offered shares to the public in October 2007, and has since made several acquisitions.
The learning systems unit contributed 42 percent of SEB’s first-quarter revenue. The business operates 31 schools providing full-time pre-school, primary, secondary and test preparation courses.
Pearson predicts SEB’s learning systems unit to have sales of about 160 million reais in 2010 and “to continue to grow rapidly.” The U.K. company said the integration of SEB’s infrastructure with Pearson’s existing business in Brazil will help to cut costs.
Pearson said the acquisition will bolster adjusted earnings per share from 2011 and generate a return on invested capital exceeding Pearson’s weighted average cost of capital from 2012.
Pearson publishes trade books, textbooks and electronic education programs, in addition to the Financial Times newspaper. About 62 percent of the London-based company’s revenue was derived from North America last year, and the U.K. accounted for 13 percent.
The Pearson-Sistema deal follows Abril Educacao’s purchase last week of Anglo, a Brazilian provider of teaching systems and educational courses, for an undisclosed amount. Grupo Multi, owner of the Wizard and Skill language schools in Brazil, acquired SOS Computadores in January.
Barclays Capital advised Pearson, with Lobo & de Rizzo acting as legal adviser. SEB was advised by Morgan Stanley, with Pinheiro Neto acting as legal adviser.
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