The parent company of The Financial Times is looking for partners to make a bid for Dow Jones & Co., the parent of The Wall Street Journal, according to a story by Dennis Berman and Sarah Ellison on The Journal’s web site.
They wrote, “On paper, at least, Pearson and Dow Jones appear a viable combination, with the two complementing each other geographically. The Financial Times is strong in Europe and less so in the U.S.; The Wall Street Journal, meanwhile, is America’s leading business publication by circulation, with a smaller presence overseas. One advantage of a Pearson-Dow Jones combination could be substantial cost-savings for the two companies.
“Indeed, about three years ago, Dow Jones and Pearson had extensive discussions about a joint-operating agreement to combine the two publications’ operations in Europe and Asia, according to two people familiar with the matter. These talks eventually broke down.
“The question for Pearson is just how to fund a deal to rival News Corp.’s $60-a-share proposal. While the London-based Pearson sits on a $13.6 billion market capitalization, News Corp.’s offer values Dow Jones at about 40 times the company’s 2007 earnings. Anticipated earnings at Pearson, which also publishes educational textbooks, and the Penguin book imprint, are valued at less than half that figure. That suggests a highly-dilutive acquisition that would weigh on Pearson’s shares.”
Read more here.
