Pearson offloads Wall Street English in $300m deal

Pearson has agreed the sale of Wall Street English to a consortium consisting of funds affiliated with Baring Private Equity Asia and CITIC Capital, it announced on Monday.

The FTSE 100 firm said the transaction was expected to generate gross cash to Pearson of around $300m after adjustments, for assumed deferred revenue and historical tax liabilities.

Tax and net transaction costs were expected to be around $50m.

It said the improvement in its net debt as a result of the transaction would be approximately $100m, as around $150m of operating cash would be retained in the disposed business.

The transaction was expected to close in the first half of 2018, subject to regulatory approval being obtained.

“At our full year 2016 results in February we announced we were exploring strategic options to shift away from large-scale direct delivery services, including a potential partnership for WSE and the sale of Global Education,” the Pearson board noted in its statement.

“After extensive review of options for WSE, we have concluded that the full disposal of WSE is the approach best aligned with our objective to simplify Pearson and focus on fewer bigger opportunities.”

In 2016, WSE served 180,000 learners and operated 70 corporate-owned centres in China, nine corporate-owned centres in Italy and 321 franchised centres across 27 territories.

It contributed £175m in revenue, an adjusted operating profit of £7m and a statutory operating profit of £4m.

The business had approximately 3,600 full-time equivalent employees at the end of June.

“The sale of Wall Street English is part of our continued effort to focus on a smaller number of bigger opportunities in global education and to become simpler and more efficient,” commented Pearson chief executive John Fallon.