Company Announcements

Pearson Announces Sale of Local K12 Courseware Businesses in Italy & Germany

LONDON, 07 JUNE 2022: In March 2021, Pearson, the world's leading learning company, announced a strategic review of its International Courseware local publishing businesses. As part of this review, Pearson already completed the disposal of its Brazilian sistemas business in October 2021 for R$789m (£108m).

Today, Pearson announces that it has agreed to sell its local K12 Courseware businesses in Italy and Germany to Sanoma Corporation, a leading European K12 learning services company operating in 11 countries and listed in Nasdaq Helsinki (SAA1V). The headline consideration of this transaction is £163m, which will be paid in cash on completion, subject to typical working capital adjustments. Under the terms of the transaction, Pearson will also enter into an agreement with Sanoma for it to distribute Pearson's English Language Teaching products in Italy.

As previously stated, the proceeds of this transaction were anticipated in the decision to commence Pearson's £350m share buyback programme, which is progressing well, with over £100m in shares repurchased since launch.

The Italian and German local K12 Courseware businesses had gross assets of c.£135m and net assets of c.£105m as at 31 December 2021^[1].The businesses generated c.£90m of revenue and c.£9m of adjusted operating profit in 2021. The enterprise value represents an EV / 2021 EBITDA multiple of 15.5x.

In 2021, the businesses that are the subject of strategic review ("strategic review businesses") contributed revenue of £252m, and £22m in adjusted operating profit. The impact of disposals of strategic review businesses on Pearson's 2022 adjusted operating profit will depend upon the timing of transaction completions, but is expected to be c.£15-20m, reflecting the second half weighting of their financial contributions. Operating cash flow for these businesses is weighted to Q4 and the timing of completion is therefore also likely to impact operating cash conversion in 2022. This cash impact will be offset by the transaction working capital adjustment, recorded within cash from investing activities.

Pearson continues to make good progress in the remaining areas of the strategic review and will provide a further update on this in due course.

BNP Paribas has acted as exclusive financial adviser to Pearson plc regarding the review of its International Courseware local publishing businesses.

This announcement contains inside information.

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