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Economist also on sale

Pearson Plc is in talks to sell its half stake in the publisher of the 172-year-old Economist magazine, marking another step toward the former conglomerate’s transformation to an education company.

The Economist is one of the assets that were excluded from London-based Pearson’s agreement this week to dispose of the FT Group to Japan’s Nikkei Inc. Pearson’s 50 percent holding could be valued at as much as 400 million pounds ($620 million), according to a person familiar with the matter, asking not to be identified because the discussions are private.

In a statement on Saturday, Pearson said discussions with The Economist Group’s board and trustees about a sale of its stake are under way. Current family shareholders, including the Cadburys, Rothschilds and Schroders, are having negotiations to acquire the stake, people familiar with the matter said.

 Another investor — Exor SpA, the investment vehicle for the Agnelli family that founded Italian carmaker Fiat — said in a separate release that it’s in talks to increase its investment in the Economist Group. Exor plans to keep its holding to a minority, it said.

Proceeds from a sale, along with those from the $1.3 billion FT transaction, would give Pearson Chief Executive Officer John Fallon the wherewithal to turn around the company’s education business. Pearson’s first-half profit stalled as demand for textbooks continued to shrink and fewer students enrolled in college.

Also under The Economist Group are the Economist Intelligence Unit and titles such as CQ Roll Call. The unit reported 60 million pounds in operating profit on sales of 328 million pounds in the 12 months through March. The Economist, which has been edited in London since 1843 and is read by many political and business leaders, has a circulation of 1.6 million.The family shareholders of The Economist Group own their stakes through Class A shares, while Pearson holds Class B shares. A transfer of the stock must be approved by the Economist Group’s four trustees.

No decision on the sale has been made, and Pearson has also held talks with other potential buyers, the people familiar with the matter said.

Pearson’s 47 percent stake in book-publishing venture Penguin Random House may also be up for sale. Beginning in October, Pearson has the option to divest the holding under an agreement with Germany’s Bertelsmann SE, which owns the remainder. People familiar with the matter said last year that Bertelsmann intended to buy all or part of the stake as soon as this year.

While Pearson gets almost all its profit from education, the company has struggled the past two years with job cuts and a reorganization to boost investment in digital services and emerging markets. It’s spending another 30 million pounds this year in part to expand online products.

John Micklethwait, current editor-in-chief of Bloomberg and former editor-in-chief of The Economist, still owns shares in The Economist Group and was not involved in the reporting and editing of this story.-Bloomberg