Top of the class in America

IN 1997 sales of primary and secondary school textbooks in the United States rose 13 per cent to nearly $3bn (pounds 1.8bn), while sales of college textbooks increased 7.4 per cent to $2.7bn, the Association of American Publishers reports. In a good year, several publishers experienced double-digit growth.

But not Pearson's educational publishing group, Addison Wesley Longman, where sales rose only 1.7 per cent and operating profits inched up by less than 1 per cent.

With those figures, Pearson chief executive Marjorie Scardino clearly understood that Pearson's choices were to "get bigger or get out". Other publishing companies came to the same conclusion years before, including Rupert Murdoch who sold the HarperCollins college division and the Scott Forseman school division to Pearson in 1996 for $580m. Unlike Mr Murdoch, however, Ms Scardino decided she did not want to get out of educational publishing, but wanted to get bigger.

When the sale of the Simon & Schuster educational units to Pearson is completed, Pearson will become America's largest educational publisher in both the school and college markets. Its worldwide educational sales will total more than $2bn.

Winning Simon & Schuster's educational operations was not simple or inexpensive. Pearson faced two of the toughest players in US financial circles: Knowledge Universe, a leveraged buy-out group led by the junk bond king Michael Milkin, and Kohlberg Kravis Roberts, the huge buy-out group whose holdings include Primedia, a diversified media company.

Bids for Simon & Schuster were due on 13 May. Sources say the first offers were at $3.8bn, and the bidding escalated to the $4.6bn Pearson agreed to pay. To finance the bid, Pearson was joined by the Dallas leveraged buy-out firm, Hicks, Muse, Tate and Furst, which agreed to buy Simon & Schuster's financial division for $1bn, leaving Pearson with a bill of $3.6bn.

The units bought by Pearson had sales of about $1.4bn in 1997 and operating profit of $210m, giving the purchase a multiple of about 2.5 times sales: steep but not unreasonable.

Ms Scardino was willing to go the extra dollar for two reasons. First, Pearson needed Simon & Schuster more than its competitors in trying to move from a struggling mid-pack publisher to a major player. Second, Pearson could pay more because it already owns publishing companies which, when combined with Simon & Schuster, will give economies of scale. Ms Scardino has promised shareholders that by 2000 the integration of Simon & Schuster and Addison Wesley Longman will result in savings of $130m.

The purchase is also about accelerating Addison Wesley Longman's growth in a number of areas. It gives Pearson a significant presence in nearly every major subject area in the school and university markets. Simon & Schuster has some of the best-known names in the industry, such as Silver Burdett Ginn, Allyn & Bacon, Prentice Hall, Modern Curriculum Press and Globe Fearon. Pearson also gains the strength of Simon & Schuster's technology: nearly all its copyrights are in digital form and can easily be "re-purposed" into electronic formats.

The acquisition will further bolster Pearson's international presence, as it includes subsidiaries in Asia, Latin America, Australia and Europe.

The man who will lead the integration of Simon & Schuster and Addison Wesley Longman is Peter Jovanovich, who joined Pearson in September 1997. He served as president of McGraw-Hill's educational and professional publishing group and has also run Harcourt Brace Jovanovich. It will largely be up to Mr Jovanovich to create what Ms Scardino envisions as "the world's leading educational publisher".

Copyright: IOS & Bloomberg

News
Patrick Stewart in the classiest ice bucket to date
people
News
Australian rapper Iggy Azalea was left red faced but, thankfully, unhurt after taking a few too many steps backwards, sending her tumbling off the stage.
peopleIggy Azalea was left red faced but apparently unhurt after taking a few too many steps backwards
News
newsComedian Lee Hurst started trend with first tweet using the hashtag
News
The current recommendation from Britain's Chief Medical Officer, is that people refrain from drinking on at least two days a week
food + drinkTheory is that hangovers are caused by methanol poisoning
PROMOTED VIDEO
Life and Style
A nearly completed RoboThespian robot inside the Engineered Arts workshop is tested in Penryn, England. The Cornish company, operating from an industrial unit near Falmouth, is the world's only maker of commercially available life sized humanoid robots
techSuper-intelligent robots could decide destroying the human race is the kindest thing to do
News
scienceExcitement from alien hunters at 'evidence' of extraterrestrial life
News
newsRyan Crighton goes in search of the capo dei capi
Life and Style
techConcept would see planes coated in layer of micro-sensors and able to sense wear and tear
Life and Style
Customers can get their caffeine fix on the move
food + drink
Extras
indybest

News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Actors front row from left, Jared Leto, Jennifer Lawrence, Meryl Streep, Ellen DeGeneres, Bradley Cooper, Peter Nyongío Jr., and, second row, from left, Channing Tatum, Julia Roberts, Kevin Spacey, Brad Pitt, Lupita Nyongío and Angelina Jolie as they pose for a
film
Sport
sport
Life and Style
techCould new invention save millions in healthcare bills?
Sport
David Moyes gets soaked
sport Moyes becomes latest manager to take part in the ALS challenge
Voices
A meteor streaks across the sky during the Perseid Meteor Shower at a wind farm near Bogdanci, south of Skopje, Macedonia, in the early hours of 13 August
voicesHagel and Dempsey were pure Hollywood. They only needed Tom Cruise, says Robert Fisk
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Software Developer (Java /C# Programmer)- London

£30000 - £45000 per annum: Harrington Starr: A global investment management fi...

Senior Network Engineer-(CCIE, CCNP, Cisco, London)

£65000 - £75000 per annum: Harrington Starr: Senior Network Engineer-(CCIE, CC...

Senior Network Analyst - (CCIE, Cisco, CISSP)

£70000 - £80000 per annum: Harrington Starr: Senior Network Analyst - (CCIE, C...

Senior Network Engineer-(Design, Implementation, CCIE)

£60000 - £80000 per annum: Harrington Starr: Senior Network Engineer-(Design, ...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition