Pearson has agreed to sell Wall Street English to a consortium including Baring Private Equity Asia and CITIC Capital. The transaction is expected to generate gross cash to Pearson of around $300 million. Wall Street English, of Barcelona, provides English language education through 400 learning centers. Moelis & Company acted as financial adviser to Pearson.
Pearson is today announcing that it has agreed the sale of Wall Street English (WSE) to a consortium consisting of funds affiliated with Baring Private Equity Asia and CITIC Capital.
The transaction is expected to generate gross cash to Pearson of around $300m after adjustments for assumed deferred revenue and historical tax liabilities. Tax and net transaction costs are expected to be around $50m. The improvement in Pearson net debt as a result of the transaction will be approximately $100m as around $150m of operating cash will be retained in the disposed business. The transaction is expected to close in the first half of 2018 subject to regulatory approval being obtained.
At our full year 2016 results in February we announced we were exploring strategic options to shift away from large-scale direct delivery services, including a potential partnership for WSE and the sale of Global Education (GEDU). After extensive review of options for WSE, we have concluded that the full disposal of WSE is the approach best aligned with our objective to simplify Pearson and focus on fewer bigger opportunities.
In 2016 WSE served 180,000 learners and operated 70 corporate owned centres in China, nine corporate owned centres in Italy and 321 franchised centres across 27 territories. It contributed £175m in revenue, an adjusted operating profit of £7m and a statutory operating profit of £4m. The business had approximately 3,600 FTE employees at the end of June 2017.
Moelis & Company acted as financial advisor to Pearson on this transaction.
John Fallon, Pearson’s chief executive, said:
“The sale of Wall Street English is part of our continued effort to focus on a smaller number of bigger opportunities in global education and to become simpler and more efficient.”