Timing of Camco sale sparks Pearson buying talk

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The Independent Online
PEARSON yesterday took the first step towards the sale of its US Camco oil services subsidiary, sparking speculation that it may be planning a big acquisition soon, writes Gail Counsell.

A bid battle for the film group Paramount in the US has opened up the possibility of a resulting sale of some of its constituent parts, especially Paramount Publishing, in which Pearson is thought to be interested. Paramount Publishing is one of the biggest book publishing groups, owning Simon & Schuster and Pocket Books.

In July, Pearson, which has interests that range from the Financial Times and Penguin Books to Lazards, the investment bank, said it intended to rationalise the group, concentrating on its media activities and disposing of Camco and its Royal Doulton china subsidiaries.

The timing of the Camco disposal - it has now said that the flotation of more than half the group will take place before the end of the year - surprised some analysts.

'I had rather expected them to wait a while. They will probably be selling at the bottom of the cycle,' said Derek Terrington, an analyst with Kleinwort Benson. But he said Pearson might have been prompted to move early by a combination of the strength of world stock markets and the desire for an acquisition.

Camco, one of the 10 biggest oil and gas service and equipment groups in the world, is valued at dollars 600m-dollars 700m. Pearson has not decided on the percentage to be floated, though it has said that it will be at least half of the group.

Paramount Books would be worth considerably more than Camco - about dollars 3bn. However, Pearson is virtually ungeared and has extensive resources.

Pearson, whose shares dropped 11p to 533p, has yet to disclose the number and price of the Camco shares. The offer will be led by a banking syndicate including Lazard and other US managers such as Morgan Stanley and Salomon Brothers.