Pearson sells $1.3B RTL stake

December 24, 2001 Posted: 0833 GMT

LONDON (CNN) -- Bertelsmann, which owns publisher Random House and BMG music, agreed to buy Pearson's stake in RTL for $1.3 billion.

Pearson, the owner of the Financial Times newspaper, plans to sells its 22 percent stake, or 34 million shares, in European broadcaster RTL for 44 a share. That price represents an 8 percent premium to Friday's closing price.

Bertelsmann, which already owns about 67 percent of RTL, said it is in talks with the board of RTL to buy the remaining publicly traded shares at a price of 44 a share. RTL said 11 percent of its shares are publicly traded.

RTL (RTL), which was created last April from the television interests of Germany's Bertelsmann, the UK's Pearson and Belgian-owned Audiofina, owns 23 television stations and 17 radio stations in 9 European countries.

The broadcaster, which screens the German versions of programmes such as Who wants to Be a Millionaire and Big Brother, has seen its stock more than halve in value this year after issuing several profit warnings as a sharp economic slowdown has forced many companies to curtail marketing spend.

RTL's stock is traded on the London, Brussels and Luxemburg stock exchanges. RTL's shares were little changed at 39 in London.   

London-based Pearson, the world's No. 1 publisher of educational books and owner of the Penguin publishing house, warned last week first-quarter advertising sales would be "markedly lower." It expects profits at FT Group, which publishes Les Echos in France, Expansion in Spain and FT Deutscheland, may fall 40 percent this year.

Pearson (PSON) expects a gain on the sale of its RTL stake of about £130 million ($187 million). The deal would be earnings enhancing in 2002 and would contribute about £35 million to its 2001 operating profits, Pearson said.

"This transaction will enable us to focus all our efforts on the businesses we control as well as strengthening our balance sheet and enhancing our earnings and cash flow," said Pearson Chief Executive Marjorie Scardino.  

Pearson's stock, which has fallen more than 50 percent this year, rose 4.3 percent to 789 pence in early London trading on Monday.