London, WC2R 0RL
Telephone: (+44 20) 7010 2000
Fax: (+44 20) 7010 6060
Web site: https://www.pearson.com/corporate
Incorporated: 1897 as S Pearson & Son Ltd.
Sales: £4.51 billion ($6.09 billion) (2017)
Stock Exchanges: London; New York
Ticker Symbol: PSON (London); PSO (New York)
NAICS: 511120 Periodical Publishers; 511130 Book Publishers; 511210 Software Publishers; 611699 All Other Miscellaneous Schools and Instruction
Since the mid-1990s, Pearson plc has transformed itself from an industrial holding company with a large and sometimes confusing group of interests into a leading learning and educational publishing company. Its offerings include educational courseware and assessments and a variety of technology-based teaching and learning services. Pearson's operations span 70 countries worldwide.
During its early years, Pearson was dominated by Weetman Dickinson Pearson, and later First Viscount Cowdray, who transformed it into an international contracting concern, which he subsequently converted to an investment trust-type operation. Pearson's roots can be traced to Weetman's grandfather, Samuel Pearson, who in 1844 became an associate partner in a Huddersfield-based building and contracting firm. In 1856 his eldest son, George, entered the business, which became known as S Pearson & Son, “sanitary tube and brickmakers and contractors for local public works in and around Bradford.”
Contracts undertaken at that time were locally based and were for railway companies and, more frequently, for the provision of water supply, drainage, and sewerage facilities to expanding industrial cities. The business developed rapidly, moving its head office in 1857 to nearby Bradford, Yorkshire, and expanding its associated brick-making, glazed tile, and sanitary pipe activities. In 1873 Weetman Pearson entered the business and received a share in its ownership following Samuel's retirement in 1879.
The British government was a major client, as were municipalities, railway and harbor companies, and water utilities. Contracts of particular note included the Admiralty Harbour at Dover and the Blackwall Tunnel under the River Thames in London. For the East River Railway Tunnels in New York, the U.S. subsidiary S Pearson & Son Inc. was formed to carry out the work. Other projects included Malta Dry Docks and Breakwaters, and Halifax Dry Dock in Canada.
However, Mexico was the country where Pearson made its greatest mark, to the extent that Weetman Pearson, who had become a member of Parliament, was dubbed in the House of Commons and elsewhere as the “Member for Mexico.” The first contract for the Mexican government, which ran from 1890 to 1896, was for the construction of the Mexican Grand Canal to drain Mexico City and its surrounding area. A succession of other government-owned or sponsored projects followed. These included the £3 million conversion of Vera Cruz harbor into a modern seaport, the £2.5 million reconstruction of the Tehuantepec Railway and its associated terminal ports that linked the Atlantic and Pacific Oceans, and the £3.3 million Salina Cruz harbor and docks.
A growing confidence between the Mexican dictator Porfirio Díaz and Weetman Pearson consolidated Pearson's Mexican interests. Under the Tehuantepec Railway contract, Pearson built the facilities at cost, provided part of the capital, and then managed the railway and ports, taking part of the profits as remuneration. This entry into the mainstream of Mexican business soon led to other interests, most importantly oil. In 1901 Pearson began acquiring oil-bearing land and by 1906 owned 600,000 acres and had royalty leases over another 250,000 acres. Oil refining began, and in 1908 Pearson entered the Mexican oil retail trade in direct competition with the Walter Pierce Oil Company, which was mostly owned by the Standard Oil Company, resulting in severe price competition.
However, it was not until 1910 that the business was transformed into an international oil concern with the discovery of the Potrero de Llano oilfield. Aguila (Mexican Eagle) Oil Company Ltd. was formed to take over most of Pearson's oil interests and make a public issue of securities. In 1912, as a means of extending this business, Eagle Oil Transport Company Ltd. and Anglo Mexican Petroleum Company Ltd. were formed to focus on international distribution and sales. Some £12 million of Pearson capital had been committed to Mexican oil.
During World War I an immense trade was done in supplying the British government. In 1919 the Royal Dutch group acquired a large shareholding in Aguila and took over management control, although for many years Pearson continued to own a large part of the company. That same year Whitehall Petroleum Corporation Ltd. was formed to take over Pearson's oil interests and prospect, mostly unsuccessfully, for oil worldwide. Its most notable action was the establishment of the Amerada Corporation, a major U.S. oil company, in 1919.
Another feature of Pearson's diversification after 1900 was the generation, supply, and application of electric power in Latin America. This began when Díaz invited Weetman Pearson to electrify and then manage the tramway system, later extended to electricity supply generally, in Vera Cruz, a service that was carried into effect by Vera Cruz Electric Light, Power, and Traction Company Ltd. Soon, Pearson developed similar schemes elsewhere in Mexico. After World War I these developments were extended outside Mexico, when undertakings in Chile were acquired. The Chilean interests were subsequently modernized and managed by Pearson's Cia. Chilena de Electricidad. All these electrical interests were consolidated into Whitehall Electric Investments Ltd. in 1922.
In 1897 Pearson, which was then reckoned to be the world's leading contractor, was converted into a limited company with an issued share capital of £1 million, all of which was owned by the Pearson family or by nonfamily directors. In 1907 Whitehall Securities Ltd. was formed to take over all of Pearson's noncontracting activities, while in 1919 S Pearson & Son (Contracting Department) Ltd. took over the firm's contracting interests. S Pearson & Son Ltd. became the group's holding company.
During World War I the contracting company was preoccupied with military contracts, of which the huge munitions plant at Gretna Green in Scotland, worth £9.2 million, was the largest. However, during the late 1920s the construction business was closed, not sold, as a going concern, apparently because of a family whim. By that point, however, Pearson had diversified well beyond the supplying of oil and electricity.
In 1908 Weetman Pearson was a member of a large syndicate that acquired the London evening newspaper, the Westminster Gazette. After the war, he acquired total control of the newspaper, converted it into a morning daily, and began building around it a group of provincial newspapers. In 1919 the company established Whitehall Trust Ltd. as a finance and issuing house, and at about the same time its principal asset, a substantial interest in Lazard Brothers & Company, the London merchant bank, was acquired. A partnership was formed with Dorman Long & Company Ltd. to develop a coal mining and iron and steel industry in Kent, although this project was not to figure prominently in Pearson's affairs.
When Lord Cowdray died in 1927, he had completely reshaped his family's business. He was succeeded as chair by his second son, Clive, while his eldest son, Harold, played a significant part in the development of Westminster Press Ltd. The management philosophy was to develop and extend the core businesses through local management. In 1929 the electricity businesses in Mexico and Chile were sold, but similar electricity undertakings were developed in southwestern England. The company played a substantial role in establishing British Airways Ltd. (not the state-owned business that came to be known as British Airways plc) in 1935.
The most significant result of World War II was the purchase of strategic Pearson assets by the British government. These included the airline interests but, much more significantly, the interest in the Amerada Petroleum Corporation, which was compulsorily acquired in 1941. The year 1948 saw the nationalization of the electricity undertakings in western England.
During the 1950s Pearson's general strategy, which from 1954 was under the chairship of the Third Lord Cowdray, was to concentrate on well-defined sectors and within them build up specialist niche businesses that produced quality products, with much decision making left to local management. This was to be a successful and enduring philosophy. The five legs on which the business now stood were financial services, publishing, oil, manufacturing, and investment trusts.
In 1945 the surviving oil interests were largely confined to oil and gas properties owned by the Rycade Corporation of the United States. During the 1950s the activities of this company were extended, while particularly successful expansion also occurred in western Canada through Whitehall Canadian Oils Ltd. In addition, a small interest in Amerada was reacquired. Publishing was strengthened in 1957, when a substantial interest was taken in Financial News Ltd., which in turn owned a large interest in the Financial Times and a small range of quality periodicals.
In 1960 the last of the overseas electricity utilities was disposed of when the business of Athens Piraeus Electricity Company, which had operated under a concession granted in 1925, was sold to the Greek state. However, a smaller trolley bus operation in Athens was retained until about 1970. In the manufacturing industry, a substantial interest in Acton Bolt Ltd., a maker of nuts and bolts, was sold to GKN Ltd. in 1959, and another in Saunders-Roe Ltd., a builder of helicopters, was sold to Westland Aircraft Company Ltd. in 1959.
An additional 30 percent of profits were generated from a 51 percent holding in the publicly quoted S Pearson Publishers Ltd., owner of the Financial Times; Westminster Press Ltd., controller of about 60 local and provincial newspapers; and the Longman Group Ltd., a general publishing house. Oil interests in North America, which were reorganized at the end of the 1960s, provided about 20 percent of profits. Manufacturing, where the chief asset was a 59 percent interest in Standard Industrial Group Ltd., another publicly quoted company, included interests in pottery, glass, engineering, and warehousing. This contributed about 7 percent of profits. Finally, 15 percent of profits were contributed by investment trusts.
During the 1970s Pearson's North American interests were mostly represented by the holding in Ashland Oil, which was held by the Midhurst Corporation. This holding was slowly reduced and the proceeds used to acquire other North American interests, especially in oil exploration and production services, as part of an effort to extend Pearson's interests outside the United Kingdom and into North America. The most significant move was the acquisition of Camco Inc., a supplier of services and equipment to the oil industry on a worldwide basis, in which a controlling interest had been purchased in 1979. This business was subsequently built up by acquisition. The Lignum Oil Co. and Hillin Oil, involved in the acquisition and development of oil-producing properties, were also acquired, but were sold in 1989 as part of a divestment of oil exploration activities that also included the sale of Whitehall Petroleum.
Financial services remained grouped around the merchant bank of Lazard Brothers in which Pearson, in 1990, had a 50 percent interest, reduced from 79 percent. This decrease followed an ownership reorganization in 1984 when, as an early response to increasing internationalization of the securities industry, Lazard of London and two other Lazard houses, in Paris and New York, became more closely linked. An exchange of ownership interests resulted in Pearson having a 10 percent profit interest in both these houses. Notwith-standing the acquisition in 1976 of the unowned part of Embankment Trust Ltd., investment trust and other portfolio-type investments were decreased to fund acquisitions.
At the time, Pearson's interests in manufacturing were concentrated in the Doulton fine china business, which emerged as a world leader with a strong overseas distribution network. The engineering interests were strengthened in 1980 by the acquisition of the high technology businesses of Fairey Industries Ltd., and their merging with Pearson's other engineering interests in 1982. However, these relatively minor activities were disposed of in 1986 as part of group policy to focus more on core activities. Similarly, involvement in the manufacture of specialist glass, which had expanded rapidly during the 1970s, was terminated in 1982 with the sale of Doulton Glass Industries Ltd.
The minority interest in Pearson Longman Ltd. was acquired in 1982. Publishing, the division of Pearson with the highest proportion of profits, embraced financial publications that included not just the Financial Times, the world's leading financial newspaper, but also a host of important financial periodicals, including the Economist, in which Pearson had a 50 percent interest, and the Investor's Chronicle, as well as online electronic publications. Longman by acquisition and organic expansion, emerged as a major publisher of professional, educational, medical, and general reference publications. Penguin Publishing Co. Ltd. also held a strong international position in publishing both paper- and hard-back fiction and expanded its operations through the acquisition, among others, of Viking of the United States and the Michael Joseph and Hamish Hamilton publishing houses in 1985.
Westminster Press expanded into newspapers distributed free of charge and disposed of several newspapers paid for by readers, as it concentrated resources in areas where it was a clear market leader. In 1987 the acquisition of Addison Wesley of the United States, with a strong schools and college list, confirmed Pearson as a major international publishing group. Its global holdings increased in 1988 by a share swap with Elsevier, a leading Dutch publishing company, and through the acquisition of the French Les Echos Group. The swap with Elsevier was undone in 1991, when the two companies were unable to devise merger terms acceptable to all parties.
Although Pearson's shares became much more widely held, the Pearson family continued to hold a large, but not controlling, share of the equity during the late 1980s. The Third Lord Cowdray retired from the chairship in 1977 and was succeeded by Lord Gibson and then by Lord Blakenham in 1983, both of whom were family members. The company's name was changed to Pearson plc in 1984, and by the early 1990s the company could claim to be one of the most successful British-based companies.
Indeed, Pearson had become quite large with considerable holdings spread across many industries. To increase profits, the company began its migration toward focusing solely on its media businesses related to information, education, and entertainment. For the remaining years of the 1990s, Pearson accelerated its acquisition and divestiture activity to mold itself into a publishing industry giant.
Pearson's purchases included Extel Financial Ltd. for £74 million in 1993 and Software Toolworks, renamed Mindscape, for £312 million in 1994. The company also acquired the Register Group Ltd. and Future Publishing Ltd. that year, along with the Interactive Data Corporation in 1995. The firm beefed up its entertainment holdings by purchasing stakes in several television concerns along with Grundy Worldwide Ltd. and ACI. At the same time, the company sold its interest in Camco International Inc., Yorkshire Tyne-Tees TV, its 9.75 percent direct holding in BSkyB for £560 million, and Westminster Press.
Pearson added to its publishing arsenal in 1996 by acquiring HarperCollins Educational, Twenty-First Century Business Publications, and Putnam Berkeley, which was renamed Penguin Putnam Inc. However, the most dramatic changes came in 1997 with the appointment of Marjorie Scardino as CEO. The first woman to lead a major British concern, Scardino immediately set plans in motion to increase revenue growth and bolster the firm's reputation in the media industry. She was joined by Lord Dennis Stevenson, the company's first nonfamily chair, who had replaced Blakenham earlier in the year.
To boost U.S. sales of its Financial Times newspaper, Pearson began investing heavily in advertising and printing, hoping to capitalize on the paper's global business coverage, which its competitors lacked. The duo also stepped up the pace of the firm's restructuring program, and divested its Troll, TVB, and Churchill Livingstone holdings in 1997. The following year it sold the famed Tussauds Group, Capitol Publishing, Future Publishing, Mindscape, and its Law and Tax publishing concerns. The company also made several key purchases, including All American Communications Inc., Resource Data International, and several newspaper concerns. However, the most significant acquisition was that of Simon & Schuster's education, reference, and business publishing arm for $4.6 billion. The deal secured Pearson's position as the world's largest educational publisher.
In 1999 the company continued to trim its portfolio with the sale of its Lazard holdings for £410 million. It also sold its Macmillan Library and General Reference businesses, Jossey-Bass, and various other noncore holdings. It also purchased E Source Inc. and Thomson Financial Securities Management.
Pearson entered the new millennium looking much different than it had just five years earlier. Scardino's strategy of streamlining company operations appeared to be paying off as revenues had doubled since 1996 and were climbing to the £4 billion mark. Operating profit had also tripled during that time, to £686 million.
The company continued to make strategic purchases to complement its media holdings. In 2000 National Computer Systems Inc. was acquired for $2.5 billion and merged into its Pearson Education unit. Dorling Kindersley plc was also purchased, and its operations were folded into the Penguin Group. Pearson then combined its asset valuation business with Data Broadcasting Inc. In July 2000 the company merged its television holdings with CLT-Ufa to form the RTL Group S.A. By that point the company stood as a global media company with its businesses concentrated on education, business information, and consumer publishing.
In 2002 the company sold its 22 percent interest in RTL Group to Bertelsmann AG for €1.5 billion and added the travel and music writing publisher Rough Guides to its Penguin business. Two additional acquisitions were made in April of that year. In a deal with Netfolio Inc., the company acquired Hulbert Financial Digest. In addition, Pearson Education acquired DDC Publishing of Lebanon, Indiana, which served the high school and postsecondary education markets, as well as the corporate, home, and government sectors, with computer training software.
More growth occurred in 2003. That year, Edexcel, the largest examination awarding body in the United Kingdom, was acquired. Additionally, several developments occurred within the company's Financial Times Group, which established its first Chinese-language business website, Chinese.FT.com , and introduced an Asian edition of the Financial Times. Finally, in November Pearson acquired Scholar Inc.
Pearson started off 2004 by striking a $101 million deal with Dow Jones & Co. for the sale of its 22 percent stake in MarketWatch. That same year the Financial Times Group continued to pursue a strategy of international growth. Besides establishing printing operations in Sydney, Australia, a 13.9 percent ownership interest in the Indian financial newspaper Business Standard was secured. One final development in 2004 took place in December, when Pearson arranged for the sale of its 79 percent stake in the Spanish media enterprise Recoletos to the investment firm Retos Cartera for €743 million.
Despite growth within the overall Financial Times Group, the publication of the same name had struggled during the early 2000s, recording a $17 million loss in 2003, followed by a $62 million loss in 2004. In November 2005 the editor Andrew Gowers resigned over strategic differences with the company, and the paper moved forward with Lionel Barber, who had served as editor in the United States, as its new head.
Several significant developments occurred in 2005. In January the company sold its Capella Education Co. business for $62.5 million. Pearson also bolstered its special education testing and publishing business by forging a $270 million deal with WRC Media for the acquisition of AGS Publishing.
Pearson kicked off 2006 by strengthening its Pearson VUE professional testing business. This was accomplished via a $42 million cash deal with Houghton Mifflin for Promissor Inc. of Bala Cynwyd, Pennsylvania, which provided state and federal regulatory bodies with licensing exams. In September Pearson acquired the financial information company Mergermarket Ltd., which was based in New York and London.
Pearson continued to make key acquisitions as it headed into the latter half of the decade. In a $950 million deal with Reed Elsevier, it agreed to acquire both Harcourt Assessment and Harcourt Education International in 2007. In addition, Pearson Education acquired the online educational services business eCollege for $477 million.
Besides acquisitions, 2007 also included several key divestitures. Early in the year, the company sold its Pearson Government Solutions business to Veritas Capital. In December Pearson agreed to sell its Les Echos SA business to the luxury goods company LVMH for €240 million. The sale included the leading French economic newspaper les Echos, as well as the economic magazine Enjeux.
Pearson proceeded to divest more of its operations in 2008. In January it agreed to sell a 50 percent interest in Financial Times Deutschland to Gruner + Jahr AG. The following month Pearson agreed to sell several tests, including the Harcourt Behavior Assessment System and the Pearson Oral and Written Language Scale, to meet U.S. Department of Justice requirements surrounding the acquisition of Harcourt Assessment. It was also in February that the M & F Worldwide Corp. acquired Pearson's Data Management operation for $225 million.
On the growth side, 2008 included the acquisition of Money-Media in January. In addition, Pearson revealed plans to introduce a daily business newspaper in India. The new publication was planned through an alliance with Network 18 Media and Investments Ltd. In March 2009 the Financial Times introduced China Confidential, a fortnightly, subscription-based digital newsletter devoted to Chinese investment intelligence. The publication, which included a related website, focused on consumer trends, as well as on political and economic issues in China.
Toward the end of the decade Pearson introduced an English as a second language test called Pearson Test of English Academic, pitting it against competitors such as the Educational Testing Service, which offered the Test of English as a Foreign Language. At the time, explosive demand for the tests was occurring in markets such as China and India. Compared with human grading, Pearson promised faster results through computerized scoring.
Pearson continued to branch out into new areas during the second decade of the 21st century, beginning with the acquisition of Cogmed AB, a Swedish-based working memory training products firm. In 2012 it paid $116 million to acquire the professional self-publishing services company Author Solutions Inc. from Bertram Capital Management LLC. In October of that year, Scardino announced that she would retire, ending 16 years as being Pearson's CEO. She was succeeded by John Fallon, head of the company's international education division, at the beginning of 2013.
As Pearson focused its portfolio on education, the company spent $650 million to acquire EmbanetCompass LLC, an online degree and learning program developer, in October 2012. In late 2013 the company generated $622.7 million by selling Mergermarket Group, its financial news business, which published titles such as Wealthmonitor, Debtwire, and DealReporter. Fallon explained to Chad Bray in the New York Times in November 2013 that the deal gave Pearson resources to expand in emerging markets and in the areas of educational services and digital learning. Subsequently, Pearson spent $723 million to acquire the Brazilianbased Grupo Multi in late 2013, bolstering its English language training capabilities.
In mid-2015 Pearson raised $350 million from the sale of its PowerSchool K-12 student information systems business, which was acquired by Vista Equity Partners. This was followed by a major divestiture when the Financial Times Group was sold to Nikkei Inc. for $1.3 billion. “Pearson has been a proud proprietor of the FT for nearly 60 years,” Fallon told Dean Starkman in the Los Angeles Times in July 2015. “But we've reached an inflection point in media, driven by the explosive growth of mobile and social. In this new environment, the best way to ensure the FT's journalistic and commercial success is for it to be part of a global, digital news company.” After the sale of its Financial Times operations, Pearson was solely focused on the global education market.
Another significant divestiture unfolded in 2015, when Pearson sold its 50 percent interest in the Economist Group to shareholders, generating $730 million and parting ways with a business it had been associated with for 58 years. Predicting that a stronger job market would cause falling college enrollments in the United States, the company announced in early 2016 it would eliminate 4,000 jobs. The cuts were part of a restructuring move that consolidated certain back-office functions, such as information technology, finance, and human resources, and combined Pearson's North American professional testing and education operations.
In late 2017 Pearson sold 22 percent of its 47 percent stake in Penguin Random House to Bertelsmann SE & Co. KGaA for $1 billion. That same year the company also established a new financial services center in Belfast, Northern Ireland, which was expected to create 300 jobs. Additionally, Pearson raised $80 million by selling its Global Education (GEDU) English language training and test preparation business to the Chinese-based Puxin Education, and $300 million by selling the Wall Street English language training network to Baring Private Equity Asia and CITIC Capital.
By 2018 Pearson had taken significant steps to transform itself into an education-focused company. Toward the end of the decade, it was a leading provider of educational courseware, assessment tools, and teaching and learning services. Although it had experienced rapid changes, Pearson appeared to be well positioned to succeed in its industry for the foreseeable future.
Updated, Christina M. Stansell; Paul R. Greenland
Pearson has hundreds of subsidiaries worldwide, including Addison Wesley Longman, Inc. (USA); Addison-Wesley Educational Publishers Inc. (USA); Connections Education LLC (USA); eCollege.com (USA); GED Testing Service LLC (USA); Pearson Amsterdam B.V. (Netherlands); Pearson Benelux B.V. (Netherlands); Pearson Books Limited; Pearson Brazil Finance Limited; Pearson Business (Asia Pacific) Pte. Ltd. (Singapore); Pearson Canada Inc.; Pearson Charitable Foundation (USA); Pearson College Limited; Pearson Deutschland GmbH (Germany); Pearson Educacion de Chile Limitada; Pearson Educacion de Colombia S A S; Pearson Educacion de Mexico, S.A. de C.V.; Pearson Educacion de Panama SA; Pearson Educacion de Peru S.A.; Pearson Educacion SA (Spain); Pearson Education (Singapore) Pte Ltd.; Pearson Education Africa (Pty) Ltd. (South Africa); Pearson Education Asia Limited (China); Pearson Education Botswana (Proprietary) Limited; Pearson Education do Brasil S.A. (Brazil); Pearson Education Hellas SA (Greece); Pearson Holdings Southern Africa (Pty) Limited; Pearson Inc. (USA); Pearson India Education Services Private Limited; Pearson Italia S.p.A (Italy); Pearson Japan KK; Pearson Learning China (HK) Limited; Pearson Longman LLC (USA); Pearson Netherlands B.V.; TQ Holdings Limited; WSI International, Inc. (USA).
Core; Growth; North America.
Dow Jones & Company, Inc.; Houghton Mifflin Harcourt Company; S&P Global Inc.
“300 Jobs on the Way as Pearson Establishes Finance Services Centre in Belfast.” News Letter (Belfast, Northern Ireland), May 8, 2017.
“Bertelsmann Acquires Additional 22% Stake in Penguin Random House from Pearson.” Datamonitor Financial Deals Tracker, July 14, 2017.
Bray, Chad. “Pearson to Sell Financial News Group for $623 Million.” New York Times, November 29, 2013.
Jones, Philip. “Pearson's Puzzle.” Bookseller, January 20, 2017, 5.
“Pearson Plc Raises $1B in Sale of Penguin Random House.” UPI News Current, July 11, 2017.
“Pearson Sells English-Language Training Network Wall Street English.” M2 EquityBites, December 1, 2017.
“Pearson to Sell PowerSchool K-12 Unit to Vista Equity Partners for USD 350m.” M & A Navigator, June 18, 2015.
“Pearson Unveils GBP382m Sale of Mergermarket to BC Partners.” M & A Navigator, November 29, 2013.
Scott, Mark. “Pearson Sells Economist Group Stake to Existing Shareholders.” New York Times, August 13, 2015.
Starkman, Dean. “Pearson Sells the Financial Times to Nikkei Inc. for $1.3 Billion.” Los Angeles Times, July 23, 2015.