Pearson seeks buyer for medical publishing arm

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The Independent Online
Marjorie Scardino, Pearson's chief executive, is to accelerate the pace of change at the media conglomerate by selling its medical publishing division.

The move could raise around pounds 100m for Pearson, and would be the first disposal of a subsidiary since Ms Scardino's arrival at the beginning of the year. The money generated would be enough to cover the losses from the unauthorised discounting scandal at Penguin USA.

The medical publishing division, part of Pearson Professional, consists of two companies - Churchill Livingstone and Churchill Communications - and includes such publications as Gray's Anatomy. It is understood that Pearson has been canvassing various potential buyers. The company was available for comment yesterday.

Meg Geldens, media analyst at Merill Lynch, said likely suitors would include Mosby, Reed Elsevier, WB Saunders, and Wolters Kluwer. She estimated that Pearson's medical division generated around pounds 50m in annual sales.

Ms Geldens added: "I think it's a significant disposal because it's a real gem that's been with Pearson for a long time. However, it's probably too small to make the City happy."

Churchill Livingstone is the UK's largest medical publisher, and specialises in books, journals, CD-Roms and conferences. It has operations in the US and the UK. Churchill Communications deals in medical communications for pharmaceutical companies, and operates in Japan, the US and Europe.

Although some analysts expressed surprise that Pearson was contemplating the disposal of some of its core publishing interests, others said it made sense, as the medical division could not compete with giants such as Wolters Kluwer, which has bought six medical publishers in the last year alone.

Churchill Communications was also badly affected by the Kobe earthquake in February 1995, and ran up a pounds 7m loss that year, which in turn reduced Pearson Professional's margin from 11.6 per cent to 6.5 per cent.

Since Ms Scardino joined, Pearson has sold its 10 per cent interest in the Hong Kong television broadcaster, TVB, for pounds 111m; its 49 per cent stake in Troll Communications, a Canadian bookselling club, for pounds 55m; and more than two-thirds of its investment in Flextech for pounds 24m.

Pearson has also announced its intention to sell residual stakes in BSkyB and SES, the Luxembourg-based Astra satellite owner. The group indicated earlier this year that it would put up for sale its 50 per cent stake in Lazard Brothers, the merchant bank, but this is likely to take much longer. It is thought that Pearson may also be contemplating selling its 5 per cent stake in the Spanish government's digital television vehicle.

Ms Scardino has come under pressure to reorganise the business since she arrived earlier this year. City disappointment that she has not revolutionised the group so far has depressed the share price over the past few months.