Pearson sells FT to Japan's Nikkei for $1.8b

Yesterday's edition of the Financial Times. The pink newspaper has just been sold to Japan's Nikkei.
Yesterday's edition of the Financial Times. The pink newspaper has just been sold to Japan's Nikkei.PHOTO: AGENCE FRANCE-PRESSE

LONDON• Japanese publisher Nikkei Inc yesterday agreed to acquire Pearson's FT Group for £844 million (S$1.8 billion) to gain control of the pink-paged Financial Times newspaper.

The sale does not include Pearson's 50 per cent stake in the Economist Group and some London property, said the British multinational, which is the world's leading education provider.

Axel Springer, publisher of Germany's Bild-Zeitung tabloid, was also in talks over the Pearson assets, according to people familiar with the matter.

"We've reached an inflection point in media, driven by the explosive growth of mobile and social," said Pearson chief executive John Fallon in a statement. "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."

Ms Marjorie Scardino, who ran Pearson for 16 years, had ruled out selling the paper. But a sale was seen as more likely when Mr Fallon, who had no publishing experience, took over the top job in 2013.

The sale would allow Mr Fallon to focus on tackling a slowdown in Pearson's education unit, which has been hit by declining college enrolment in the United States and falling textbook sales.

The FT Group had 2014 revenue of £334 million and £24 million in adjusted operating profit.

Pearson shares rose 2.2 per cent to 1,235 pence at 3.28pm in London yesterday, valuing the company at £10.1 billion.

Yesterday's edition of the Financial Times. The pink newspaper has just been sold to Japan's Nikkei. PHOTO: AGENCE FRANCE-PRESSE

Pearson said it plans to put about £90 million of the proceeds into its pension plan.


First published in 1888 as a four-page newspaper, the FT's circulation reached 720,000 last year, with digital subscriptions accounting for 70 per cent of the total.

In a move to make more money from online readers, the newspaper in February tweaked its paywall system, moving away from a metered model that allows readers to view a few free articles every month before requiring them to pay.

While the FT has done well in adapting to the digital revolution, helped by a loyal customer base who will pay for access to the newspaper and website, analysts do not think it makes much of a profit.

"They've done a good job - probably better than anybody else from a UK newspaper perspective - in terms of transitioning to a model online, so I think you can see why that is attractive," said one analyst.

The deal brings to an end years of speculation as to whether the 171-year-old Pearson would sell the FT, a so-called "trophy asset" which was first printed on pink paper in 1893 in order to make it stand out from rival titles.

Pearson bought FT in 1957. The group though has moved to focus solely on education and has sold off other news interests such as the Mergermarket Group and a company which included French business newspaper Les Echos in recent years. In 2012, it merged its Penguin book division with Random House, the largest general-interest trade book publisher in the world.

Pearson has endured a tough time of late, with weaker demand in the North American education arm.

Analyst Ian Whittaker said Pearson would likely use any proceeds to pay down debt. "If they could obtain a trophy asset price then it could look pretty good against the relatively modest profits that the FT generates," said Mr Richard Marwood, senior fund manager at AXA Investment Managers, a shareholder in Pearson.

Evercore, Goldman Sachs and JP Morgan Cazenove acted as financial advisers to Pearson. Rothschild Group assisted Nikkei.


A version of this article appeared in the print edition of The Straits Times on July 24, 2015, with the headline 'Pearson sells FT to Japan's Nikkei for $1.8b'. Print Edition | Subscribe