Apollo drops £7.2bn takeover move for education firm Pearson

Bosses at Pearson said the move ‘significantly’ undervalued the company and its future prospects.

An education publisher has rejected a third and final takeover offer (Ben Birchall/PA)
An education publisher has rejected a third and final takeover offer (Ben Birchall/PA)

Private equity giant Apollo has dropped its takeover pursuit of Pearson after the educational publisher rejected a third bid to buy the firm.

The London-listed company saw its shares slump after Pearson turned down the £7.2 billion approach.

Bosses at Pearson said the move “significantly” undervalued the company and its future prospects.

Apollo had said the offer would be its final offer and, under UK takeover rules, it must now walk away from bidding for the publisher for at least six months.

It comes after the US investor sent a highly conditional 800p per share takeover bid in November.

At the start of this month, Pearson was also approached about a 854.2p per share bid, which values the company at a little under £6.5 billion.

The firm has now rejected the latest offer, which valued the company at £6.7 billion and would also purchase its £500 million in debt.

On Wednesday, the US firm said: “Apollo notes that it has been unable to reach agreement with the board of Pearson as to the terms of an offer for the entire issued and to be issued share capital of Pearson.”

Pearson defended its current digital-focused strategy and said it believes it will grow under its current leadership.

In a statement, it said: “Pearson’s board is confident that the direct to consumer, lifelong learning strategy set out by management in March 2021 will create sustainable, long-term value for Pearson stakeholders.

“Since becoming chief executive, Andy Bird has reorganised and refocused Pearson, successfully launching Pearson+ in July 2021, representing an exciting future for Pearson, with plans in place for engaging more consumers and growing beyond higher education.

“Pearson is creating the premier digital learning ecosystem for life – a connected consumer and commercial strategy relevant for consumers everywhere, providing a growing global addressable market.”

Shares in Pearson fell by 7.5% to 727p after the announcement.

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