Financial Times parent could acquire other half of Economist

The Financial Times, which itself has been the speculation of buyout talk in recent years, apparently could be on the verge of acquiring the 50 percent of regarded magazine The Economist it doesn’t already own, according to a story on the British web site This is Money.

Pearson Plc is the parent of the FT and would actually be the one doing the acquiring.

James Ashton of the Daily Mail wrote, “Established in 1843 by Scottish hatmaker James Wilson, sales of The Economist have doubled to more than 1m in the last decade after US readership took off.

“Pearson stepped in to rescue the title when it almost went bust 80 years ago.

“But its early woes are a far cry from the annual profit of £24m it made in 2005, far in excess of the FT’s skimpy £2m.

“Insiders say that earnings are likely to leap to £40m in the next few years. It also owns the lucrative freehold to its shiny St James’s headquarters. In addition, there is more value in its consultancy arm, the Economist Intelligence Unit.

“With numbers like these doing the rounds, investors may question why Pearson values its 50% stake at just £79m in its books.

“FT Group boss Rona Fairhead is keen to tidy up ownership of assets, including The Economist stake. Investors think the FT division itself could eventually be sold or spun off from Pearson (up 5p at 828½p yesterday). Carlyle is among private equity buyers thought to have recently run the slide rule over the Pink ‘Un.”

Read more here.