Pearson PLC agreed Monday to buy the textbook business of Simon & Schuster, Viacom Inc.’s U.S. publishing unit, for $4.6 billion, to become the world’s largest educational publisher, with about a third of the U.S. market.
Pearson will retain Simon & Schuster’s educational units, which had a 1997 operating profit of $210 million on sales of $1.4 billion, and sell the professional and reference units to U.S. buyout firm Hicks, Muse, Tate & Furst Inc. for $1 billion. Viacom will keep the Simon & Schuster name and its consumer publishing unit.
It is Pearson’s first major acquisition under chief executive Marjorie Scardino, who has vowed to double the company’s value by 2002. For Viacom Chairman Sumner Redstone, the sale secures top dollar for the company’s smallest unit in terms of sales and allows him to focus on its entertainment businesses, such as MTV, Nickelodeon and Paramount Pictures.
Pearson owns the Financial Times, Penguin Group books, half of the Economist magazine and 50 percent of investment bank Lazard Partners.
“Strategically, it’s a very good acquisition,” said Louise Barton, an analyst at Henderson Crosthwaite Institute. “They’ve certainly been forced to buy up for it. You can probably justify it long-term, but it’s certainly not a cheap deal.”
