Pearson is selling its US K12 public schools courseware business to private equity group Nexus Capital Management in a deal worth $250m (£193m).
The sale is made up of an initial payment of $25m (£19m), with a further $225m (£174m) expected to be repaid in three to seven years. After that, Pearson will still be entitled to 20% of future cash flows to shareholders and net proceeds if the business is sold on and the market improves.
Pearson’s courseware issues textbooks and resources to students and teachers going through the K12 public school system. The division employs around 1,330 people with gross assets of £648m and net assets of £75m. Last year, it generated £364m in revenue and around £20m of operating profits.
The publisher said the sale, expected to be completed in the first financial quarter of 2019, was part of its plan to become “simpler and more efficient”, focusing on larger growth opportunities.
It said the broader K12 market was still an important sector and it would continue investment in digital products like virtual schools and student assessment along with higher education courseware for advanced placement in K12 schools.
Pearson chief executive John Fallon said: “School publishing in America has been an important part of Pearson for many years, and what it does matters to teachers and students across the country. We're pleased to have found new owners who are committed to its future, and we wish it every success. The sale frees us up to focus on the digital first strategy that will drive our future growth.
“Through our assessment, virtual school, advanced placement and career and technical education programmes, we will still serve schools across America and we will now be better placed to focus on the areas in which we can best help their students to be successful in their studies and future careers.”
Figures released by the Association of American Publishers last week showed a marked decline in revenues for education and scholarly materials last year across the US among those publishers reporting to it.