Could Pearson sell the Financial Times?

Gerelyn Terzo of The Motley Fool examines whether Pearson Plc will sell The Financial Times in the wake of disposing of Mergermarket.

Terzo writes, “In 2012, the FT Group generated £443 million in sales, up 4% from 2011 levels. But profits fell 36% to £49 million as a result of the fact that index provider FTSE International was no longer part of Pearson’s portfolio amid the company’s sale of its holding. Does this mean that in 2014 Pearson will experience declining profits and point to the sale of Mergermarket?

“The FT Group, per Liberum Capital estimates, are valued at approximately £647 million, which is broken down as £400 million for the FT and £247 million for The Economist. Pearson sold Mergermarket for £382 million, which is slightly above the consensus valuation.

“And despite some analyst buzz as recently as a few months ago surrounding the possible sale of the FT Group, those rumors have been quelled for the time being. But Pearson may find that its shareholders are disappointed with the fact that there does not appear to be a plan to return any of the cash from the Mergermarket sale to investors directly. Instead the company intends to invest in digital publishing and education.

“So if there is enough of an investor backlash, Pearson could theoretically rethink a sale of the FT Group. But analysts say that selling The Economist would be a more complex undertaking than unloading Financial Times because of certain ownership terms. And if shareholders clamor enough, the potential sale of Financial Times could be back on the table.”

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