Content area
Under terms of the agreement, Addison-Wesley would merge with Pearson's educational and professional book publishing unit, Longman Holdings of White Plains, N.Y. The new company would be called Addison-Wesley Longman.
Nevertheless, the merger agreement is subject to approval by two-thirds of the shareholders of Addison-Wesley's Class A and Class B stock. However, Addison-Wesley said it has granted proxies and options to Pearson that would ensure that at least 90 percent of the Class A holders and 32 percent of the Class B holders would approve the transaction.
In London, a Pearson spokesman said negotiations with Addison-Wesley began last December. However, the diversified publishing giant has had its eye on Addison-Wesley for more than a decade, primarily because of Addison-Wesley's strength in engineering and computer science texts.
Addison-Wesley Publishing Co., the nation's sixth-largest publisher of college textbooks, yesterday said it agreed to be acquired by Britain's Pearson PLC for $105 a share, or $283 million.
Reading-based Addison-Wesley, which negotiatied with a handful of potential buyers, said the proposed merger would enable the firm to compete more effectively within an industry that is dominated by larger companies.
Under terms of the agreement, Addison-Wesley would merge with Pearson's educational and professional book publishing unit, Longman Holdings of White Plains, N.Y. The new company would be called Addison-Wesley Longman.
Donald R. Hammonds, Addison-Wesley's chairman and chief executive officer, said the combined company would be based in Reading.
"It's business as usual," Hammonds said, adding that there would not be any layoffs among the company's 1,300-person work force following the merger. Hammonds, who would become executive deputy chairman of the new company, said executives at Addison-Wesley would retain their positions.
Pearson, which owns the Financial Times and Penguin books, has long coveted Addison-Wesley. In fact, Pearson has agreed to pay almost twice the value of the company's shares.
In national over-the-counter trading, Addison-Wesley closed Friday at 54 1/ 2, up 1 1/2. The stock markets were closed yesterday for the Presidents' Day holiday.
Pearson, which also has interests in Madame Tussaud's wax museum and Royal Doulton china, may have other motives for agreeing to pay such a rich price.
Australian-publisher Rupert Murdoch owns a 20.5 percent stake in Pearson, and some analysts have speculated the company is trying to make itself less attractive as a takeover candidate by loading up on debt, the Reuters news service said yesterday. Pearson denied that the move, along with the recent $150 million acquisition of a French business newspaper, is meant to thwart a takeover by Murdoch.
Nevertheless, the merger agreement is subject to approval by two-thirds of the shareholders of Addison-Wesley's Class A and Class B stock. However, Addison-Wesley said it has granted proxies and options to Pearson that would ensure that at least 90 percent of the Class A holders and 32 percent of the Class B holders would approve the transaction.
Addison-Wesley's management controls most of the 191,000 shares of Class A stock, which would fetch about $20 million under the merger agreement.
In London, a Pearson spokesman said negotiations with Addison-Wesley began last December. However, the diversified publishing giant has had its eye on Addison-Wesley for more than a decade, primarily because of Addison-Wesley's strength in engineering and computer science texts.
"We've longed for them for many, many years," the spokesman said.
On the surface, Addison-Wesley is strong financially. In 1987, the company had earnings of $9.5 million, or $3.68 a share, on sales of $167.4 million; its profit as a percentage of sales was a solid 5.7 percent.
Still, Addison-Wesley said it had little choice but to seek a buyer, largely because the textbook industry is increasingly controlled by big book publishers such as Simon & Schuster Inc. Thus, the company would need deeper pockets to compete, Hammonds explained.
"We were basically looking three, four, five years down the line," he said.
| GILMAN;02/15 LDRISC;02/16,21:50 ADDISO16 |
Copyright Boston Globe Newspaper Feb 16, 1988