Pearson sells local courseware business in South Africa for £53m

Pearson has sold its 75% share of the K12, Technical & Vocational Education and Training catalogue and local higher education courseware business in South Africa to Novus Holdings for £53m.

The transaction forms part of the publisher’s review, announced in March 2021, of its international courseware local publishing businesses and follows the disposal of its K12 business in Brazil.

The South African arm’s headquarters in Cape Town have been acquired by Novus, a specialised printing and packaging manufacturing group which services customers across sub-Saharan Africa, as part of the deal.

Pearson said the £53m headline consideration of the sale will be received on completion, subject to typical working capital and net debt changes and adjusted to reflect its 75% share. The transaction remains subject to customary closing conditions, including regulatory and Novus Holdings shareholder approval.

The South African K12, TVET and local Higher Education Courseware business had gross assets of £15m and net assets of £5m as of 30th June 2022. The businesses generated £44.4m of revenue and £10.3m of adjusted operating profit in 2021.

Pearson said the sale of this business concludes its review of international courseware local publishing businesses. The proceeds of the transaction were anticipated in the decision to commence Pearson’s £350m share buyback programme, which the organisation says is “progressing well”, with more than £170m in shares repurchased since launch.

The impact of disposals of strategic review businesses on Pearson’s 2022 adjusted operating profit will depend on the timing of transaction completions, the organisation said, but is expected to be £15m to £20m, reflecting the second-half weighting of their financial contributions.

Pearson has decided to retain its Australian and English-speaking Canadian K12 courseware businesses to deliver "increased shareholder value".

Its latest trading update showed  a “strong” financial performance for the first half of this year, with underlying sales up by 6% to £1.8bn from £1.6bn in the same period last year and adjusted operating profits up 22% to £160m (2021: £127m).