Investors Pressure Pearson CEO for Details on Sale of U.S. K-12 Curriculum

Associate Editor

Two investment analysts asked about the pending sale of global education company Pearson’s U.S. K-12 curriculum business today during the public company’s webcast about its half-year results.

John Fallon, Pearson CEO, gave a brief response: “We are continuing to hold the K-12 business for sale. This signals [that] we do expect to proceed with a disposal.”

In recent years, Pearson sold off properties—including the Financial Times—to focus on education. It also has downsized significantly to streamline its operations and grow.

Later in the call, a second analyst pressed the issue: “You still expect to sell that business? It’s been a  long time. At what stage should you take this off the ‘for sale’ assets list? Normally with this type of sale. [it] should be concluded maybe quicker than it has been.”

Fallon reiterated his position: “It’s held for sale because we expect to sell it.”

Then the CEO added that, over many years of selling businesses, “one thing I’ve learned is to never give a running commentary.”

“When there’s something to announce, we’ll announce it,” he said.

Pearson initially announced in May 2017 that it was studying the potential for a sale, and in February 2018 the company said the K-12 curriculum business is officially on the market. At that time, curriculum products and services were identified as a “lower margin” part of its enterprise, representing about 9 percent of its revenues but returning profits of about 2 percent or £11 million (approximately $15.35 million) last year.

Investors might want to see faster movement from Pearson, but in not rushing into a sale, the company is probably “just being smart,” said Mitch Weisburgh, the co-founder of Academic Business Advisors, LLC, in an e-mail.

“Ed-tech investors are a little like lemmings,” said Weisburgh, who is also president of the Educational Technology Industry Network of the Software & Information Industry Association. “They’ll follow the crowd, even if it takes them over a cliff.”

Weisburgh—who was not part of the conference call—said “what’s sexy” to ed-tech investors now are these opportunities: “artificial intelligence; next-generation tech platforms, and blockchain.”

While Pearson has some of that, “they are mostly in more boring sectors,” he said.

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