Pearson deal gives it strong Connections

Education and publishing group Pearson yesterday said it was buying a US-based “virtual school” business in a $400 million (£252m deal).

Connections Education provides teaching via online courses to more than 40,000 students who are being schooled at home in 21 US states.

Pearson, which is seeing strong growth in its education division, said the acquisition would enable it to use the technologies developed by Connections in other areas of its business. As well as the US market, the company also believes there is significant potential to roll the model out overseas.

Connections has produced revenue growth of more than 30 per cent in each of the past three years and expects to generate revenues of around $190 million in 2011.

Pearson expects the deal to enhance adjusted earnings per share from 2012.

Chief executive Marjorie Scardino said : “For a decade or more we’ve invested in education technologies that have the potential to make learning more effective for each child.

“Connections Education does that. Virtual schooling is an attractive choice for a growing group of American parents and in the next decade it will take off in other countries.”

The company’s co-founder Barbara Dreyer will stay on as chief executive of Connections following the deal.

In July Pearson, which also publishes the FT, raised its full-year guidance after a strong first half. Shares in Pearson rose by 32p to close at 1,110p yesterday.