Pearson Shares Down 1.1% After Reports it Might Bid for Dow Jones

Monday, 18 Jun 2007 | 5:34 AM ET

Shares in Pearson, publisher of the Financial Times, were lower in early trading Monday following weekend reports that the company might bid for Dow Jones.

Pearson shares fell 1.1% to 863.5 pence (12.75 euros; $17.07) on the London Stock Exchange.

The Wall Street Journal reported that Pearson was trying to mount a counteroffer to News Corp.'s $5 billion offer for Dow Jones, a financial information provider and publisher of the same newspaper.

On Sunday, the Wall Street Journal said Pearson and General Electric , which owns U.S. broadcaster NBC, were discussing a joint bid which would combine the Financial Times, Dow Jones and business channel CNBC in a privately held venture.

Other reports said Pearson had approached other possible investors to go 50-50 on an offer for 80% or more of Dow Jones shares, leaving the Bancroft family _ the controlling shareholders _ to retain 10-20% of the company.

Numis Securities said in a research note that Pearson would have difficulty beating the offer by Rupert Murdoch's News Corp., which represents a 65% premium. However, the Bancroft family has so far resisted Murdoch's overtures.

Numis said any move by Pearson and GE would be largely defensive against the competitive pressures they would face from a News Corp.-owned Wall Street Journal and the Fox Business News channel.

"At face value this looks like Pearson would be swapping control for a non-controlling stake in a larger newspaper group," said Simon Wallis, an analyst at Collins Stewart.

However, Wallis said such a deal could reduce competition within the newspaper business, give Pearson a stake in a faster-growing broadcast network and monetize the value of the Financial Times.

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