Finnish media group Sanoma has acquired Pearson’s K12 learning content business in Italy and its small exam preparation business in Germany for €190 million.

The enterprise value equates to a multiple of 6.4x the combined businesses’ adjusted EBITDA of €30 million generated in 2021.

Sanoma will finance the acquisition with debt and has signed an underwritten four-year term loan facility with Nordea Bank Abp, OP Corporate Bank and Skandinaviska Enskilda Banken.

The acquired businesses will become part of Sanoma Learning, the K12 learning content division of Sanoma. The Italian business generated revenue of €104 million and the German business of €13 million in 2021. The two companies employ 251 staff, of which 161 in Italy and 90 in Germany. They will become employees of Sanoma Learning after the closing of the acquisition.

Pearson will pay the consideration of this transaction in cash on completion. Following the deal, the company will also enter into an agreement with Sanoma for the distribution of its English language teaching products in Italy.

This sale is part of Pearson’s review strategy of its International courseware local publishing businesses, which was announced in March 2021. As part of this strategy, Pearson already completed the disposal of its Brazilian sistemas business in October 2021 for £108m. The company is likely to sell additional assets in North America and Asia in the coming months.

“Pearson Italy will bring us sizable increase in the scale of secondary education, improving the leverage of our investments in developing digital platforms for that particular segment,” says Susan Duinhoven, president and chief executive of Sanoma. “Pearson Germany brings a small and interesting addition to our niche services in the German education market. The acquisition strengthens Sanoma Learning’s position as a leading K12 learning service provider in Europe contributing around 70% of Sanoma’s earnings and adding to our cash flow generation.”

Sanoma plans to invest additional €10 million in the development of digital learning platforms for secondary education over the next three years, following the closing of this acquisition, to bolster its digital offering for secondary education in Italy and other operating countries.

The company also announced its strategic growth ambition to increase the group net sales to over €2 billion by 2030, with at least 75% coming from its learning business division.

BNP Paribas acted as exclusive financial advisor to Pearson on this transaction.

Date Published: 7 June 2022

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