Novus finds a home for some of its extra cash in Pearson SA

Printing and manufacturing company Novus Holdings has moved to acquire a majority stake in Pearson SA, a courseware business that services all tiers of the education market.

Pearson SA, which also provides digital and supplementary resources for teachers and learners, had an audited net asset value of R643m as of the end of December.

The deal, which is subject to the fulfilment of certain conditions and approval by competition authorities, gives cash-flush Novus a stronghold in the lucrative educational materials field as the group looks to diversify, reposition and restructure away from traditional print businesses as highly competitive markets shrink.

The transaction, announced on Friday, will see Novus take up a 75% equity share in Pearson SA which holds iconic brands such as Maskew Miller Longman and Heinemann — two of the best-known educational materials publishers and printers in SA providing learning content and teacher training for use in schools, TVET colleges, higher education institutions, and home and professional environments.

Novus said the Pearson SA courseware business aligns with its core print activities and would benefit from Novus’s distribution, publishing and production network.

The JSE-listed company said the opportunity to purchase the large equity stake arose after Pearson SA’s parent, London-listed Pearson Plc, decided to divest from Pearson SA, which is the owner of extensive education-related intellectual property.

The local company boasts a sophisticated and comprehensive sales and distribution network across SA and leverages its long-term relationships with education departments, content owners and developers, to provide high-quality learning materials to students.

“The transfer of control from an international shareholder to Novus, with its established infrastructure, ensures that there will be no disruption in the delivery of important educational materials to schools and learners,” the company said.

“It also creates the opportunity for the focused localisation of learning solutions, which will further assist to alleviate some of the unique challenges in SA’s education system.”

Highlighting that the sale of its courseware business in SA followed the disposal of its businesses in Brazil and its courseware French Canadian business, Pearson Plc said the transaction formed part of its strategic review of its international courseware local publishing businesses.

“The headline consideration of this transaction is £53m (R1.04bn), which will be received on completion, subject to typical working capital and net debt changes and adjusted to reflect our 75% share,” Pearson Plc said.

While the paper-based textbook business is expected to remain a significant part of the education system, digital solutions are also a big focus for Pearson SA, which has developed multiple solutions to provide digital content as students migrate from traditional blackboards to digital alternatives.

The acquisition comes as Novus Holdings wraps up its restructuring project that it embarked on three years ago which involved the liquidation of surplus assets and release of working capital in line with operational requirements.

The Cape Town-based group reported an astounding recovery for the year to March, reporting an operating profit of R161m after a loss of R27.4m in the previous year.

After this repositioning, Novus said the core print business still remains viable with the group focusing on operational management and return on assets, coupled with selective opportunities for investment and growth.

Headwinds including global supply shortages in paper have spurred a huge increase in paper prices, coupled with shrinking capacity and supply-chain disruptions that have led to uncertainty

Novus Holdings’ share price rose the most since June 2021, up 13% to R2.95 on Friday. It has climbed more than 26% so far this year.

gumedemi@businesslive.co.za