Pearson PLC expands into new Chinese ESL markets

Pearson is rapidly building on its 2009 acquisition of the Wall Street English language centers in China and has used much of the US$2 billion it collected from the 2010 sale of data provider IDC for education acquisitions in China and India.

“Through organic investment and complementary acquisitions, we're learning a lot about the very significant growth opportunities we see in China and about the value of combining our content and technology with high-quality school networks,” John Fallon, Chief Executive of Pearson's International Education Business, said in a statement on Monday.

Global Education and Technology Group, which teaches children and adults, has a network of 450 test preparation and training centers in China, of which it owns about 115 with the remainder run as franchises.

“As well as continuing the process of EPS upgrades from deploying cash, we see this deal as strategically positive too,” UBS analyst Alastair Reid wrote in a note.

“Pearson trades at 8 (times) 2012 (estimated) EBITDA -- we view this as far too cheap for the only global player in a global structural growth industry,” added Reid, who has a “buy” recommendation and 1,450 pence target price on the stock.

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