Pearson seeks a buyer for Madame Tussauds

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The Independent Online
PEARSON, the media conglomerate, is understood to be looking to sell Madame Tussauds, the waxworks that has become one of London's most popular tourist attractions. The group is believed to have discreetly approached potential buyers in an attempt to broker a deal.

Pearson held talks with Rank, the Butlins to Hard Rock Cafe leisure group, earlier this year according to industry sources. The discussions subsequently broke down over the valuation put on the business. Rank balked at Pearson's asking price of more than pounds 300m and walked away from the deal.

However, Pearson is still keen to dispose of Madame Tussauds following yesterday's pounds 2.2bn acquisition of Simon & Schuster's educational publishing divisions from Viacom. The deal leaves Pearson with a pounds 2.5bn debt load which it is keen to reduce.

The company said yesterday that it would "reduce the level of borrowings through the ongoing disposal of passive investments and businesses that lack critical mass or are likely to be worth more to others than to Pearson."

Although the group refused to comment on specific businesses, Madame Tussauds fits clearly into the latter category. "It must go," one analyst said yesterday. "There is no strategic logic in keeping it."

The sale of Madame Tussauds would be the group's most significant disposal since the arrival of Marjorie Scardino as chief executive at the beginning of last year. Ms Scardino has embarked on a radical restructuring of the group, selling Mindscape, the computer games group and Future Publishing, the magazines business, earlier this year.

Pearson said yesterday it would consider issuing equity worth 10 per cent of its share capital, a move that would bring in about pounds 500m. The company is also prepared to sell off its stakes in BSkyB and Flextech, the broadcasters.

Investors yesterday welcomed the acquisition, pushing up Pearson's share price 87.5p to 1027.5p. The deal creates a leading company in educational publishing, a market which Ms Scardino called "one of the great growth industries of our time." The deal is expected to yield cost savings of $130m in the first two years.

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