Nexus Capital Management’s $250 Million Acquisition of Pearson’s U.S. K12 Courseware Business

Barclays and Citi acted as financial advisors and Morgan, Lewis & Bockius acted as legal advisors to Pearson on this transaction. Kirkland & Ellis acted as legal advisor to Nexus on this transaction.

Pearson today completes another major milestone in its simplification programme with the announcement of the sale of its US K12 courseware business to Nexus Capital Management LP (Nexus) for headline consideration of $250m. Total proceeds comprise an initial cash payment of $25m and an unconditional vendor note for $225m expected to be repaid in three to seven years. Following the repayment of the vendor note, Pearson is entitled to 20% of all future cash flows to equity holders and 20% of net proceeds in the event the business is sold. This additional consideration has been structured to provide Pearson with the potential to capture future upside in the US K12 courseware adoptions market over the coming years.

This disposal is an important part of our ongoing work to become a simpler and more efficient company, focused on fewer, bigger opportunities that contribute towards growth and our digital transformation. It will greatly simplify our ongoing technology, systems and office rationalisation. The broader US K12 market remains an important area of focus for Pearson and we are continuing to invest in faster growing digital services such as virtual schools and building on our strong position in US student assessment. We will continue to provide Higher Education courseware for Advanced Placement programmes in K12 schools.

Pearson’s US K12 courseware business provides textbooks and instructional resources to help teachers and students at every stage of K12 learning in the United States. It employs approximately 1,330 people. The US K12 courseware business had gross assets of £648m and net assets of £75m as at 31 December 2018 and generated around £364m of revenue and approximately £20 million of adjusted and statutory operating profit in 2018.

The transaction is expected to complete at the end of the first quarter of 2019 and cash proceeds generated in due course will be used for general corporate purposes.

The Kirkland team was led by transactional partners Doug Ryder (Picture) and Michael Sartor and associates Marcelo de Antunano and Ethan Smith; technology & IP transactions partners Adam Petravicius and Shellie Freedman; finance partner Kathryn Leonard; and tax partner Jared Rusman and associate Tristan Evans-Wilent.

Involved fees earner: Marcelo de Antunano – Kirkland & Ellis; Tristan Evans-Wilent – Kirkland & Ellis; Adam Petravicius – Kirkland & Ellis; Jared Rusman – Kirkland & Ellis; Douglas Ryder – Kirkland & Ellis; Michael Sartor – Kirkland & Ellis; Eithan Smith – Kirkland & Ellis; Shellie Weisfield Freedman – Kirkland & Ellis;

Law Firms: Kirkland & Ellis;

Clients: Nexus Capital Management LP;


Author: Ambrogio Visconti