# Pearson to sell remaining 25% stake in Penguin Random House to Bertelsmann

- Link: https://www.directorstalkinterviews.com/pearson-to-sell-remaining-25-stake-in-penguin-random-house-to-bertelsmann/412801240
- Published: 2019-12-18T07:23:13+00:00
- Author: Amilia Stone

**Pearson** (LON:PSON), the world’s learning company, today announced an agreement
to sell its remaining 25% stake in Penguin Random House to partner Bertelsmann SE&
Co KGaA for a consideration of approximately $675m / (£530m). The transaction is
in line with Pearson’s simplification strategy.

This transaction values the Penguin Random House venture at an enterprise value 
of $3.67bn, compared with the $3.55bn enterprise valuation in 2017 when Pearson 
sold a 22% stake in the joint venture.

The disposal is subject to regulatory consent and is expected to close in the first
half of 2020 and therefore will have no impact on 2019 results. Pearson is committed
to its disciplined approach to capital allocation and in early 2020 will commence
a return of capital to shareholders through a £350m share buyback. Shares repurchased
will be cancelled. The remainder of the proceeds will be used for general corporate
purposes.

The formation of Penguin Random House in 2013 created the first truly global consumer
book publishing company, with a significant market presence, generating synergies
through the integration process and creating significant shareholder value. Our 
stake2 in Penguin Random House will have generated c.£1.9bn in net disposal proceeds
and dividends.

Pearson owns 25% of the Penguin Random House venture which in 2018 reported revenue
of $3,703m and EBIT of $467m as reported in € converted at a 2018 average €/$ exchange
rate of 1.18, gross assets of $4,407m and net assets of $1,166m converted at a 2018
closing €/$ rate of 1.15. In 2018, Pearson’s 25% associate share in the venture 
contributed £68m after tax to its adjusted operating profit.

> **John Fallon, Pearson’s chief executive, said**: “For almost 50 years, Pearson
> has been proud to play our part in the publishing and commercial success of first
> Penguin and then more recently Penguin Random House. With the sale of our remaining
> stake to our partners, Bertelsmann, we know the company is in good hands – and
> we wish our colleagues and authors every future success. This enables Pearson 
> now to be completely focused on building the world’s leading digital learning 
> company, linking education to employability and skills, and reaching more learners
> around the world to support them through a lifetime of learning.”

**Notes:**

_^(1) Based on guidance $/£ exchange rates of 1.27._

_^(2 )47% stake held between 1^(st) July 2013 and 5^(th) October 2017, 25% stake
held from 6^(th) October 2017._

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