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Education giant Pearson sells off Wall Street English language teaching unit

Last updated: 04:25 28 Nov 2017 AEDT, First published: 23:25 27 Nov 2017 AEDT

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The deal will only help the former Financial Times owner to cut its debt by US$100mln or so, it emerged

Pearson plc (LON:PSON) , the education giant, revealed on Monday it had sold off its Wall Street English language teaching unit.

A group of funds linked to Baring Private Equity Asia and Citic Capital have stumped up US$300mln for the division, which Pearson bought for US$240mln seven years ago.

The deal will only help the former Financial Times owner to cut its debt by US$100mln or so though due to various costs and the fact that US$150mln of cash will stay with the language-training business.

Pearson – which has struggled recently and issued a string of profit warnings – said the sale was part of its strategy to focus on a “smaller number of bigger opportunities in global education”.

It announced back in February that it was looking for a strategic partner for Wall Street English as part of a strategic review launched after it reported a record £2.6bn loss.

City broker Liberum reckons the fact that net debt will only be reduced by a “paltry” US$100mln will likely disappoint investors who “would have been looking for bigger cash proceeds”.

“It also explains why the business was able to be sold at such a high headline figure,” added analyst Ian Whittaker.

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