Pearson is one of the market's leading risers after splashing out another $230m to help beef up its educational business.
The UK publisher is buying New York based digital learning firm Schoolnet, which supplies data tools to help teachers personalise learning. Founded in 1998, Schoolnet serves around 5m pupils from pre-kindergarten to secondary education in around a third of America's largest cities.
Pearson, which has spent around $1.4bn on education companies since selling its stake in Interactive Data Corporation for $2bn last year, said the acquisition would be earnings neutral in 2011. It believes Schoolnet will benefit from the Obama administration's $17bn drive to support school improvement through measures such as comprehensive data systems. Pearson chief executive Marjorie Scardino said:
Being able to offer a connective digital spine for learning has been Pearson's goal for years. Schoolnet has shared our passion, and together we can make that spine more flexible and powerful for schools, teachers and students.Panmure Gordon issued a hold note on Pearson, with analyst Alex DeGroote saying:
This sort of acquisition is consistent with other deals by Pearson (e.g eCollege). The company's track record in this sector, in terms of return on capital invested and execution/implementation, ensures low risk of deal failure. Allowing for some upside to 2012 earnings per share, the multiple looks full relative to peers, in our view. Our target price is revised to 1150p from 950p.
News of the deal has lifted Pearson almost to that revised target. Its shares are up 18p to �11.49, helping the FTSE 100 add 21.06 points to 6039.36 at the start of the brief session of trading days between bank holidays.
Miners however are on the slide as metal prices slide on demand fears on the prospect of further rate rises in China and ahead of UK and US GDP figures this week. Randgold Resources is down 80p at �52.25 while Antofagasta is 20p lower at �13.71.
But technology companies are brighter, with Autonomy up another 30p at �16.50 on further consideration of last Thursday's figures, while Arm has added 11p to 616p.
Source: http://www.guardian.co.uk/business/marketforceslive/2011/apr/26/pearson-buys-schoolnet
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