Thomson set to sell education publishing business for $5bn

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The Independent Online

Thomson, the Canadian media giant, looks set to announce that its education business has been put up for sale, with a price tag of $5bn (£3bn).

The development comes amid a shake-up of the educational publishing business, where London-listed Pearson and Reed Elsevier are big players.

Houghton Mifflin, the fourth -largest US educational publisher, is reportedly about to be sold to Irish group Riverdeep, in a $3.5bn deal. And Wolters Kluwer, a Dutch publisher, is reviewing its education business, which is reckoned to be worth some €600m (£420m).

It is thought that Thomson would divest education to concentrate on its other publishing interests, in financial, legal, and scientific sectors. Thomson's education division, which produced revenues of $2.3bn last year, represents a quarter of the company but is growing more slowly than its other businesses. This "Learning" division is also not so easily converted into an electronic delivery business.

Lauren Rich Fine, an analyst at Merrill Lynch in New York, said: "TOC [Thomson] at its core is a must-have information company that has rapidly embraced technology as both a way to offer workflow solutions and improve the economics of its businesses. The Learning division in this context has proven challenging over the last handful of years."

Thomson's Learning division is in the higher education end of the sector, where Pearson is the market leader. Pearson's market share in US higher education publishing, of some 36 per cent, means that it would almost certainly be precluded from adding the Thomson business - which has more than 25 per cent of that market. Pearson is also a leading player in US school text books and it may be interested in the Wolters Kluwer business.

Conor O'Shea, an analyst at Teather & Greenwood, said: "Pearson would run into competition issues [with Thomson Learning] but this may well be something Reed would look at. It would give them [Reed] as comprehensive an education offering as Pearson."

Reed is a big player in the American schools sector but it has no position in higher education and has not stated any intention to go there.

The most likely buyers of Thomson Learning are reckoned to be private-equity houses, which have shown an appetite for publishing - London-listed Informa had a private-equity bid this month while Houghton Mifflin is being sold by a private- equity house.

There was also some speculation that France's Lagardère media group could be tempted by Thomson Learning.

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