Nikkei, Japan’s largest media company, is to buy the FT Group from Pearson for £844m, after stunning its rival bidder Germany’s Axel Springer with an eleventh hour offer for the London-based global news organisation. The deal marks the end of an era, bringing the curtain down on Pearson's 58 year ownership of the Financial Times at a time of upheaval in the global media industry.
The battle for the FT turned into a duel between Nikkei and Axel Springer, two groups keen to develop their international presence with a move into the English-language market.
Axel Springer has been in talks with Pearson for nearly a year, while Nikkei only entered the picture in the last five weeks. But two people close to the situation said the German company did not know it had been trumped by Nikkei until 15 minutes before cash-rich Japanese company's deal with Pearson was announced.
Pearson’s former chief executive, Marjorie Scardino, famously said the newspaper would be sold ”over my dead body”. Her successor, John Fallon, who took over in January 2013, always stopped short of delivering such a full-throated defense of Pearson’s ownership.
In recent years, as the company has focused on consolidating its status as the world’s largest education business, it has sold many of its media assets, such as Les Echos, the French media group.
The deal comes at a time of dramatic change in the global media industry. Traditional newspapers are seeing print circulation and advertising revenues decline while digital upstarts and big technology companies like Google are increasingly moving into the business of generating and delivering news.
Mr Fallon said on Thursday “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.”
He added that Pearson’s ability to “preserve the FT’s editorial independence and integrity isn’t enough”, and the newspaper would be better served by an owner that could invest in its global journalism.
The agreement will bring the FT into the same stable as The Nikkei, Japan’s biggest-selling business newspaper, with 3.12m subscribers.
Tsuneo Kita, chairman and group CEO of Nikkei, said: “Our motto of providing high-quality reporting on economic and other news, while maintaining fairness and impartiality, is very close to that of the FT. We share the same journalistic values. Together, we will strive to contribute to the development of the global economy.”
Lionel Barber, FT editor, said: “The FT is a world-class asset. I am confident that working together with our new proprietor will ensure that it remains so”.
The deal covers the FT newspaper, FT.com, and titles such as The Banker and Investors Chronicle, but does not include the FT Group’s London headquarters at One Southwark Bridge and the FT Group’s 50% stake in The Economist Group, which publishes The Economist news magazine.
The FT has fared better than many rivals, with its total circulation across print and digital rising more than 30% over the past five years to 737,000. Pearson said on Thursday that FT Group contributed £334m of sales and £24m of adjusted operating income to Pearson last year.
As part of the deal with Nikkei, which is privately held, Pearson will make a £90m contribution to its group pension plan, and the company said it had made a commitment to funding the pension plan to self-sufficiency in the near term.
Pearson said the balance of the proceeds from the transaction would be used for general corporate purposes and investment in its global education strategy.
Pearson shares, which have fallen one-fifth since March, were up 2.1% at £12.34 in London. “The company is not performing well overall, so disposing of an asset would obviously be good news,” said one banker.
The FT has an editorial team of 500 journalists in more than 50 locations around the world. It was first published as a four-page newspaper in 1888 and was bought by Pearson in 1957. Pearson was advised by JPMorgan Chase, Evercore Partners, Goldman Sachs and the law firm Freshfields. Nikkei was advised by Rothschilds and Skadden Arps. (FT).