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