Viacom in frame to bid for Pearson
Acquisitive US entertainment giant considered a 'good fit' with British media group
Sunday 04 February 1996
Analysts believe the two companies have much in common. "Viacom and Pearson would make a tremendous fit," said Neil Blackley, the highly rated media analyst at American investment bank, Goldman Sachs.
"While Pearson has no video rental chain and Viacom does not own an investment bank, both have TV and educational publishing interests as well as theme parks."
With revenues of more than $11bn (pounds 7.2bn), Viacom is now the world's second largest media group after Time Warner. This follows a series of important acquisitions including the Paramount film studio, book publisher Simon & Schuster, the Blockbuster chain of video stores and music channel MTV.
Having sold cable and property assets to pay off debt, Viacom is thought to be back in expansionist mode, despite the abrupt departure last month of Frank Biondi, chief executive and mastermind of the spending spree. Viacom has also been linked with the possible pounds 5bn acquisition of Thorn- EMI, which is in the process of spinning off its music and retail division. A company spokesman in New York declined to comment.
Pearson, whose chairman is Lord Blakenham, is widely seen to be in the bid frame after reports last week that television and leisure group Granada, which recently landed hotels giant Forte after a bitter takeover battle, had last year considered offering pounds 9 per share, or pounds 5bn, for the owner of the Financial Times, Penguin books, Madame Tussauds and Thames, the television production company.
However, Granada is said to have walked away after failing to reach an agreement with the Cowdray family and Lazards, the merchant bank controlled by Pearson, which together ownabout 21 per cent of the group. Neither Pearson or Granada have commented on the report.
Some observers think Pearson's complicated share structure and family influence rule out a full bid. "Gerry Robinson [of Granada] has looked at it, and so has Rupert Murdoch. They both have concluded it is too hard to do, " said Jonathan Helliwell, media analyst at broker James Capel.
Mr Helliwell denied market reports that he had issued a note advising clients to take profits in Pearson. He said his recommendation remained a hold.
Buoyed by bid rumours and demerger talk, shares in Pearson have been strong performers so far this year, although they slipped 7p to 655p on Friday amid profit-taking.
Demerger speculation has centred on the possibility that Pearson might spin off its television division, headed by new main board member Greg Dyke, which has expanded rapidly to include Grundy Worldwide and SelecTV.
A separate listing for Pearson TV is said to have been discussed internally, though this suggestion was angrily denied by a company spokesman.
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