Pearson confirms talks to sell FT, Axel Springer 'in advanced talks'

Pearson confirmed it is in advanced talks to sell the FT Group, the division that publishes the Financial Times newspaper and several other business titles, although it warned there was no certainty that a transaction will finally take place.

The Financial Times itself later reported that its parent company was in talks with German media conglomerate Axel Springer, citing "several people familiar with the situation", as well as Nikkei, the Japanese media group.

The FT said discussions with Springer were the furthest advanced.

Having under previous management protested it would never sell the salmon-coloured paper, Pearson's new chief executive John Fallon has been in advanced talks exploring a sale of the division for the past few weeks.

FT Group comprises the Financial Times, a number of related titles and a 50% stake in the Economist Group, publisher of the Economist magazine.

A brief confirmation from Pearson followed a report earlier in the day from Reuters that said the education and publishing group had decided to sell newspaper to a "global digital news company" and was set to make an announcement shortly.

For Atif Latif, director of trading at Guardian Stockbrokers, the transaction, if confirmed, "would be a positive move for Pearson even though they would be selling a strong asset and brand. Much will depend on the price point for this sale, if confirmed, but we are mindful that the effective asset sale is a small margin making business".

He added that questions will arise as to what the realised cash would be for especially given the relatively lacklustre performance of Pearson shares in the year to date.

"Much will depend on the price point for this sale"

On 20 July Bloomberg reported Pearson, as it increasingly focuses on its US-centred education business, was sounding out bidders for the paper and that a sale could value the business at as much as £1bn, citing people familiar with the matter.

On Thursday, Bloomberg added that no final decision on a buyuer had yet been made.

Other recent reports had referenced Axel Springer as a potential suitor. Other rivals linked to a possible deal included Bloomberg and Thomson Reuters.

After Pearson, Springer is biggest digital publisher in Europe, owner of the die Welt broadsheet and tabloid Bild, the German edition of the Rolling Stone and a wide variety of others, including the UK's TotalJobs website. It has a strong balance sheet and cashflow and, with a strategy of organic growth supported by active M&A, has made a successful transformation to the digital era with 73% of EBITDA from online and mobile activities last year.

The speculation comes amid a difficult situation for the company's US assessment business. Indeed, when new Pearson chief financial officer Coram Williams takes up his post in September, the unexpected difficulties faced by the US assessment arm could provide "incentive for him to consolidate earnings expectations conservatively rather than push them forward," analysts at Morgan Stanley said in a research report sent to clients on 14 July.

Pearson, whose largest shareholders are Threadneedle Asset Management, boutique asset manager Lindsell Train and the Libyan Investment Authority, has received much interest in buying the FT from publishing rivals but former chief executive Marjorie Scardino had famously vowed that the paper would be sold “over my dead body”.

As of 10:47 stock in the company was 1.82% higher to 1,231p.