The Economist Group announced on 12 August 2015 that it will buy back 5.04m ordinary shares (20% of total share capital) from Pearson plc for £182m. Pearson’s remaining shares in the Group will be acquired by Exor for £287m, including all of its 1.26m B shares and 6.3m ordinary shares (30% of total share capital).<br />
The transaction will include amendments to the Group’s articles, which will safeguard the independence of the company and crucially, the editorial independence of The Economist. The proposed changes will be put to a shareholder vote next month and include a 20% voting cap for any individual shareholder, and a rule that no one individual or company can own more than 50% of the Group’s shares.
The repurchased shares will be held in treasury and act as a future source of equity that can support the growth of the company. This transaction will be immediately accretive to earnings and dividends. The purchase of the shares will be part-funded by the sale of the Economist Complex, which has been the home of the editorial team since the 1960s.
Rupert Pennant-Rea, the chairman of The Economist Group, said:
“We have been blessed over many years to have had in the Financial Times and subsequently Pearson, a shareholder that understood and supported the ethos of the Group. We all owe them a considerable debt.
“With their decision to sell, the board’s priority was to secure the independence of the ownership of the Group and the continued editorial independence of The Economist. The strength of the Group’s balance sheet meant that we could reorganise our shares so as to reinforce our editorial independence and benefit our shareholders. The transaction has the full support of the Board, the trustees and the current editor of The Economist as well as her surviving predecessors.
“This agreement will also lead to the sale of the Economist Complex, which has served us well for many years. Now it will enable us to shore up an even greater asset, our independence. New offices, with more space for our digital ambitions and the needs of a 21st century media company, will be found for a new chapter in our history.
“The Board is also pleased to welcome Exor, an exemplary shareholder for the past six years, in its new role as the anchor investor in the Group. Exor has shown great respect for the culture and traditions of The Economist, underscored by its willingness to cap its voting rights.”
Pearson chief executive John Fallon said: “Pearson is proud to have been a part of the Economist's success over the past 58 years, and our shareholders have benefited greatly from its growth.
”Pearson is now 100% focused on our global education strategy.“
Exor chief executive, John Elkann, said: ”By increasing our investment in the Economist we are delighted to affirm our role as one of the group's long-term supportive shareholders, along with the Cadbury, Layton, Rothschild and Schroder families and other individual stable investors.”