Pearson, the education and media group that owns the Financial Times, yesterday confirmed it is reviewing the future of Interactive Data Corporation (IDC), its majority-owned financial data subsidiary, suggesting it could be sold.
The two companies said that the board of IDC, which is valued at about $2.4bn (£1.5bn), is "undertaking a preliminary review of strategic alternatives for the company". It is believed to have held talks with potential bidders, although they remain at an early stage.
Pearson, which owns a 61 per cent stake in IDC, added that it could give no assurances on the potential outcome or timing of the review, but declined to comment further.
Giasone Salati, an analyst at the stockbrokers Execution, said the proceeds of a potential disposal of the IDC stake "could be used to expand its presence in international education at a time when many publishers are not able to compete".
Rumours emerged at the beginning of the year that Pearson was looking to offload its stake in IDC. Mr Salati speculated at the time that FT Group – the division of Pearson that includes the FT and the IDC stake – would be a fit for the media group Bloomberg, which last April announced it would add 950 staff to its news and technology operations.
The talk was backed by analysts at Bernstein, who marked Pearson as the top pick in the European media sector, but added that the FT introduced some unwelcome cyclical exposure.
Bloomberg has since ruled itself out, while the market has also speculated that rivals Thomson Reuters or McGraw-Hill could be interested in a deal.
Investors will look for news of progress at the company's trading update next week. It is due to announce its full-year results in March.
The most recent financial update came in October when Pearson revealed it had shrugged off the downturn to increase its profit expectations for the year. The upgrade means pre-tax profits should rise to £720m, analysts said.
Strength was seen particularly in the group's education business in North America. While it had feared the region would struggle in the fourth quarter, its shares rose in December after rival McGraw-Hill said education spending would improve.
However, the first nine months of its financial year saw underlying revenues at the FT Group fall 14 per cent from a decline in advertising. Revenues at its book publisher, Penguin, fell 2 per cent.
Last summer, Pearson revealed it had talked to investors about a possible cash call, which would have been about 5 per cent of the market capitalisation. Shareholders rejected the move as they wanted more details on what the cash would be used for.Reuse content