UK-based educational publisher Pearson has rejected a takeover offer amounting to around £6.5 billion, presented by investment firm Apollo Global Management.

Pearson has confirmed that on 7 March it received an unsolicited, preliminary and highly conditional proposal from Apollo regarding a possible cash offer for its entire share capital at a price of 854.2 pence per share.

The board of Pearson considered the proposal and concluded that it “significantly undervalued the company and its future prospects.”

The board stated that it was “confident that the lifelong learning strategy set out in March 2021 will create sustainable, long-term value for Pearson stakeholders and that the results for 2021 demonstrated the building momentum as Pearson executes on this new strategic vision.”

Citigroup, Morgan Stanley and Goldman Sachs are acting as advisors to the company.

Pearson had previously rejected another takeover proposal from Apollo, received in November 2021. The proposal included the acquisition of the company’s entire share capital at a price of 800 pence per share.

Earlier today, Apollo had confirmed its interest in the takeover and stated that it was “in the preliminary stages of evaluating a possible cash offer by certain of Apollo’s affiliated funds for Pearson.”

Following Apollo’s announcement, shares in Pearson soared almost 20% on the London Stock Exchange.

Pearson provides textbooks for schools, higher education institutions and professional training courses as well as digital learning solutions and online tutoring products in 200 countries worldwide.

The company, that was already suffering from a difficult transition from print to digital, was badly affected by the pandemic and recorded a sharp decrease in sales. Its total revenue fell 12% to £3.4 billion in 2020 and its adjusted operating profit decreased to £313 million in the period, from £581 million a year earlier.

In 2021, revenue stabilised at £3.4 billion, while adjusted operating profit saw a slight increase to £385 million.

Pearson chief executive Andy Bird, a former senior Disney executive appointed in October 2020 to lead the publishing company and shape its digital transformation, said in a recent statement: “Pearson has been reorganised and refocused with a new purpose. We are a digital first business, with consumer grade products, and the momentum across the company underpins our confidence for further growth in 2022 and beyond.”

In January 2022, Pearson acquired Credly, a digital workforce credentialing company in which it already owned a nearly 20% stake, in a deal value at around $200 million. This comprised an upfront consideration of approximately $140 million, Pearson’s existing stake valued at about $40 million and an additional deferred consideration.

Date published: 11 March 2022

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