Pearson chief's plans to step down sparks talk of Financial Times' sale
04 October 2012
Pearson Plc chief executive officer Marjorie Scardino is to step down after 16 years and will be succeeded by the head of its international education business, sparking speculation the company might sell the Financial Times newspaper.
According to the London-based company John Fallon, 50 would replace Scardino, 65 from January 2013. The first female CEO of a major UK company, Scardino almost tripled Pearson's sales during her tenure. She was made a Dame of the British Empire in 2003.
Taking over as chief in January 1997, Scardino, started expanding Pearson's education business even as she started pushing digital versions of books, journals and newspapers to counter stagnating sales of print products.
According to some analysts, her departure raised questions over whether the Financial Times Group, which owns the newspaper as also a 50-per cent stake in The Economist, would be sold.
The company in July reported a 9.6-per cent drop in first-half operating profit as income from its professional training business declined.
Pearson was down 0.6 per cent to 1,230 pence as of 3:36 pm in London, valuing the company at 10 billion pounds. The stock was up 2.2 per cent through yesterday, while the FTSE 100 benchmark index gained 4.3 per cent.
According to some analysts, potential buyers for the Financial Times would inlcude Bloomberg LP, News Corp and Thomson Reuters Corp.
Bloomberg would be an obvious buyer given it had print operations with its Businessweek magazine, while News Corp, which was in the process of splitting off its publishing holdings, could use the Financial Times as an important part for that new business, they said.
The Financial Times Group contributed to 7 per cent of sales at Pearson last year, while education made up 75 per cent, and Penguin book publisher accounted for 18 per cent.
Responding to a question about the fate of the Financial Times, Fallon said on a conference call today that the newspaper was ''highly valued and a very valuable part of Pearson.''
Fallon has been chief or the international education unit at Pearson since 2008.
''With more than 15,000 people in 70 countries, this division is fundamental to Pearson's growth strategy,'' the company said.
Under Fallon, international education sales have increased to 1.4 billion pounds from 322 million pounds .
The number of Pearson employees more than doubled to 41,520 in 2011 during Scardino's tenure even as sales almost tripled to 5.87 billion pounds while operating profit more than tripled to 942 million pounds. The company's share price has risen more than 80 per cent after she took over as CEO while the FTSE 100 index gained about 40 per cent.
The Arizona-born, Texas-raised former rodeo racer helped found the Pulitzer Prize-winning Georgia Gazette in 1978 which later folded in the mid-80s.
A graduate from Baylor University and the University of San Francisco's School of Law, prior to becoming CEO of Pearson, she was CEO at the Economist Group. Scardino was named a fellow of the American Academy of Arts and Sciences in 2010.
According to Pearson chairman, Glen Moreno, the company had initiated a "rigorous" succession planning process for the chief executive post since 2010, which accelerated earlier in 2012 when Scardino told the board of her intention to step down at the end of the year.
Describing Fallon as a strong experienced manager he praised Scardino saying, there were many numbers to represent Marjorie's achievement but there was a bigger point – Marjorie had built a company with a strong sense of purpose, the sort of enduring company in the famous business book, which the company published, Built to Last.