Pearson buys US education publisher

Pearson, the UK-based education and media group, has paid $270m cash (£148m) for AGS, a privately-held US educational publisher.

Minnesota-based AGS publishes assessment and curriculum materials for students with special educational needs, such as those with disabilities or whose first language is not English.

Pearson, which owns Penguin books and the Financial Times, said these areas were attracting new funding under the US “No Child Left Behind” policy, and that expenditure on students with disabilities made up 22 per cent of education spending in the US.

The US school sector is Pearson’s biggest market. Shareholders were told at Pearson’s annual general meeting in April that US public spending on textbooks was expected to rise sharply during 2005.

Pearson said the acquisition was expected to be earnings-neutral for 2005 and would enhance earnings per share in 2006, its first full year. It was also expected to meet the cost of capital in 2006, and to enhance return on invested capital from 2007.

AGS had 20 per cent sales growth last year and made an operating profit of $23m, Pearson said. Its net asset value at December 31 was $26m.

AGS curriculum and assessment staff and product lines will remain based in Minnesota.

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