Pearson rejects two bids from US private equity group Apollo

Educational publisher Pearson has rejected two preliminary bids from American private equity group Apollo Global Management, saying the most recent offer, reported to be $8.5bn, “significantly undervalued” the publisher.

In an announcement on 11th March, Pearson confirmed that the group first made an offer on 5th November 2021 followed by a second on 7th March 2022, both of which were rejected. 

Apollo had earlier said that it was “in the preliminary stages of evaluating a possible cash offer” for the company.

Pearson said its board unanimously concluded that both previous offers “significantly undervalued the company and its future prospects”, outlining its belief that the publisher’s lifelong learning strategy set out in March 2021 will create sustainable, long-term value for Pearson stakeholders and that the results for the financial year 2021 demonstrated the momentum of its its new strategic vision. 

In 2021 Pearson saw full-year group sales up 8% with profits expected to boom by a third, according to an unaudited trading update issued in January.

Pearson posted a strong performance across most areas except for Higher Education sales, while overall, the results showed that sales in English Language Learning grew 17% for the full year due to a Covid-19 recovery in both international courseware and Pearson Test of English (PTE) where volumes grew 25% compared to 2020. 

Under takeover rules Apollo, which last year sold McGraw Hill to Platinum Equity for $4.5bn, now has until 8th April to either make another firm offer or walk away. 

An earlier statement from Apollo preceding Pearson’s response read: “Apollo Global Management Inc and its subsidiaries... notes the recent market speculation in relation to Pearson and confirms that Apollo is in the preliminary stages of evaluating a possible cash offer by certain of Apollo’s affiliated funds for Pearson.”