Pearson Soars as Apollo Weighs Cash Offer

This post was originally published on this site – Pearson (NYSE:PSO) ADRs surged 21% in premarket trading Friday on a Bloomberg report that Apollo Global Management (NYSE:APO) is evaluating a cash offer for the education and publishing company.

The stock had risen earlier in the morning following a report on the Betaville blog about a possible approach for the company.

Apollo has time till April 8 to announce a firm intention to make an offer or to withdraw, according to U.K. takeover rules.

Europe’s largest activist investor Cevian Capital currently owns 10.2% of Pearson, making it the company’s largest shareholder.

The company, after seeing its traditional business of college publishing decline, has pivoted to the ‘digital first’ game, selling directly to consumers via its Pearson+ app and to businesses looking to train staff.

The company closed December with 2.75 million registered users on its app including 133,000 paid subscriptions. It recently acquired Clutch Prep, an online video-based learning service to fuel Pearson+ with original video tutorials.

Demand for assessment and qualification services grew 19% in the year. Growth in the IT sector led to a 19% growth in professional certification. US student assessment and English language learning rose 17% each, the latter benefiting from the recovery in both international courseware and Pearson Test of English.

The British company reported 2021 adjusted operating profit of 385 million pounds ($504 million) on sales of 3.42 billion pounds. It expects 2022 revenue to be higher.

The company is confident of getting 416 million pounds in adjusted operating profit in 2022, in line with current market expectations. The higher education business will continue being a drag on operations although the revenue decline should slow this year, according to the company. 

It expects pricing pressure to continue due to the shift from print to ebooks and Pearson+, and from bundles to digital-only.