Pearson to sell 22% stake in Penguin Random House for $1bn

Pearson has agreed to sell a 22 per cent stake in Penguin Random House to its partner in the publishing unit, majority owner Bertelsmann SE, for about $1 billion. Pearson's aim is to strengthen its balance sheet.

After the sale, Pearson will return about £300 million ($386 million) of surplus capital to shareholders through a share buyback while keeping a 25 per cent stake in the iconic book publisher, Pearson said in an emailed statement.

The transaction values Penguin Random House at an enterprise value of $3.55 billion. As part of the agreement, the publishing unit will be recapitalised, distributing dividends to both partners.

Pearson gets almost all its profit from education after already selling the Financial Times and its half of the Economist Group. The company announced a reorganisation last year as it seeks to address sluggish demand in its main education business, which has been hit by dwindling US college enrolments and falling textbook sales.

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Pearson combined Penguin with Bertelsmann’s Random House in 2013, leaving the British company owning just under half of the venture, which publishes books from writers including John Grisham, Ken Follett and George RR Martin.

-Bloomberg