Yesterday's bombshell from Thomson Corporation was a humdinger - it's finally saying goodbye to Thomson Learning. OK, there were intimations of it earlier this summer in comments made by ceo Richard Harrington. But now we have a timetable for departure.
Thomson is exiting the education market, selling off all the various operations in the Learning division (bidding starts in Q1), and reorganising its remaining operations (effective 1 January 2007). This time next year it will be quite a different company.
Thomson execs say that the money generated from this refocusing of its business could be more than $5bn, and this would help it expand into fast-rising markets like China and India. More significantly, it will help with bottom line profitability, as the education markets remain steadfastly wedded to less profitable print products, and government budgets continue to be squeezed.
To get a measure of how significant this announcement is, take a look at this Thomson chart of its 2005 corporate structure. Learning is the second biggest division, with revenues of $2.18bn. It's dwarfed only by Tax & Regulatory, although the contribution of the Financial division is thought to have overtaken it recently.
In yesterday's reorganisation, Thomson said it is creating six divisions: North American Legal; International Legal & Regulatory; Tax & Accounting; Financial; Scientific; and Healthcare. The aim is to continue to focus on developing electronic workflow solutions – a trend that is growing across the industry.
Thomson has already agreed to sell the continuing education and elearning operation netG to Skillsoft for $285m, with the remaining assets to be put under the hammer early next year. Assets available are: the testing and assessment business Prometric, higher education operation Wadsworth, the career skills specialist Delmar Learning and the library reference operation, Thomson Gale.
An obvious buyer for the latter is arch-rival ProQuest, although its accounting wobbles this year may mean it's in no mood (or position) to pay out big bucks for sometime. Will the other operations have any eager buyers with deep pockets?
Anyone vaguely familiar with Thomson's history (it once owned the UK newspapers The Times and Sunday Times, as well as assets in the travel and energy industries) will know it often makes hard-headed decisions to exit markets where performance or prospects are faltering. Whether it will be able to raise the kind of cash it hopes with this "let's get the hell out of Iraq" kind of exit strategy will be well worth watching over the next six months.
Who are the likely buyers for library market items? It seems like the library market is shrinking rapidly, but at the same time librarians need these types of books.
ReplyDeleteFirst off this report is jumping to wild conclusions. Yes Thomson plans to sell this unit.
ReplyDeleteThey have already sold off Net G and will sell off Prometric.
If you read the wires Thomson plans to sell the book and library division as 1 unit. Not break it up. To think Proquest has this type of money is crazy. No way they buy Gale they do not have the pockets to do this.
Odds are this will be sold off to a private equity firm.
Does Google have the pockets or the motivation to acquire such a huge corpus?
ReplyDeleteI very much doubt that Google would be interested, though you're right George, it's rolling in cash. These businesses are probably too old school for its taste. I've been wracking my brains about likely buyers with deep pockets - Reed Elsevier, possibly but I think unlikely, and Springer is preoccupied with a possible merger with Informa/Taylor & Francis. Which leaves, as Gordon suggest above, a private equity firm or consortium as the most likely buyers. And they're likely to negotiate hard with Thomson.
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