Struggling Pearson sells Wall Street English to private equity, bringing in "paltry" $100m

 
Lucy White
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The ailing education group Pearson has sold its English language training network, Wall Street English (WSE), in an effort to help keep the London-listed company's head above water.

Baring Private Equity Asia and CITIC Capital bought WSE for around $300m (£225m), but the deal is only expected to improve Pearson's debt by around $100m – a “paltry sum”, according to analysts at Liberum.

In its 2016 full-year results this February, Pearson – which used to own the Financial Times and The Economist – revealed net debt had escalated to a massive £1.1bn.

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“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,” said Pearson's chief executive John Fallon.

The deal incurred $50m of tax and transaction fees, while $150m of cash will remain in WSE. Liberum's Ian Whittaker reiterated a target price of 330p and a “sell” recommendation, while Pearson's shares sank by 1.62 per cent to 696.5p in early trading.

In February, Pearson announced it was exploring a shift away from “large-scale direct delivery services”, and as part of that would consider partnering WSE and its language training business Global Education.

Read more: Pearson shares jump as it reveals new cost-cutting measures ahead of its AGM

But it concluded that a full sale of WSE was “the approach best aligned with our objective to simplify Pearson”, as Global Education sold to China's Puxin Education in the summer.

Last year, WSE served 180,000 learners and contributed £175m of revenue to Pearson with an operating profit of £7m.

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