Pearson announced on Monday that they had agreed to sell its US K-12 textbook business to Nexus Capital Management for $250 million.
Nexus will pay an initial $25 million and a further $225 million in the form of a vendor note to be paid over the next three to seven years. Following the repayment of the vendor note, Pearson will be entitled to 20% of all future cash flows to shareholders as well as net proceeds if the division is sold and the market improves.
Pearson CEO John Fallon said U.S. school publishing had been an important part of Pearson for many years, and he was pleased to have found a new owner committed to its future.
“The sale frees us up to focus on the digital first strategy that will drive our future growth,” he said. “Through our assessment, virtual school, advanced placement and career and technical education programs, we will still serve schools across America and we will now be better placed to focus on the areas in which we can best help their students to be successful in their studies and future careers.”
According to the Bookseller, the K-12 US textbook division employs around 1,330 people with gross assets of £648 million and net assets of £75 million. Last year, it generated £364 million in revenue and around £20 million in operating profits.
Pearson said that they would continue to invest in digital products like virtual schools and student assessment along with higher education courseware. The publisher also said the sale, which is expected to be finalized in the first fiscal quarter of 2019, was part of its plan to become “simpler and more efficient”, focusing on larger growth opportunities.
In other words, there's still money in selling content to schools, just not textbooks.