January 15, 2010 / 7:59 AM / 9 years ago

UPDATE 2-Pearson confirms could sell $1.5 bln stake in IDC

* Pearson, IDC say strategic review at preliminary stage

* FT says Bloomberg not looking at buying Pearson’s stake

* Pearson shares up 2.1 percent (Adds background, shares, analyst comment)

By Georgina Prodhan and Matt Scuffham

LONDON, Jan 15 (Reuters) - Publishing group Pearson (PSON.L) may sell its $1.5 billion majority stake in financial market data provider Interactive Data Corp IDC.N, Pearson and IDC confirmed in response to a Financial Times report on Friday.

Pearson — which owns the FT as well as the world’s biggest educational publishing business and Penguin books — issued a short statement saying the board of IDC was conducting a preliminary review of strategic alternatives.

“Pearson and Interactive Data can give no assurance on the potential outcome or timing of this review process,” it said. IDC issued an identical statement.

Shares in Pearson, which owns 61 percent of IDC, rose 2.1 percent to 906 pence by 1016 GMT, outperforming a European media index that was up 0.9 percent.

“We see the move as positive for sentiment, removing the issue of leakage of cash flows to minority IDC shareholders and given the likely use of funds for potential expansion in a growth area,” UBS analyst Alastair Reid wrote in a note.

The FT said IDC was sounding out potential buyers, citing people familiar with the situation.

The paper said financial information providers Thomson Reuters (TRI.TO) and Bloomberg and publisher McGraw Hill MHP.N — which owns credit-rating agency Standard & Poor’s — would all be a good fit for IDC.

The FT cited Bloomberg as saying it was not looking at IDC.

Thomson Reuters declined comment, McGraw Hill had no immediate comment, and Bloomberg was not immediately reachable by Reuters on Friday.

IDC, whose market capitalisation of $2.4 billion has barely changed in the last year, sells financial information and analytical tools on a subscription basis to banks and other financial institutions.

It expects 2009 revenue and operating income to be roughly the same as in 2008, when it made revenue of $751 million and operating income of $210 million. Pearson’s 2008 revenues were 4.8 billion pounds ($7.8 billion).

The steady nature of IDC’s revenues and electronic work tools it provides fit with Pearson’s general business model.

If it were to sell the stake, Pearson could use the proceeds for other bolt-on acquisitions in education in emerging markets or digital learning.

Its normal acquisitions budget is 200 to 300 million pounds per year, and the company is committed to maintaining its credit ratings, which have been BBB+ and Baa1 for about a decade.

Pearson has recently invested in two Indian education firms, and last April bought a leading Chinese provider of English-language training, Wall Street English, for $145 million in cash.

The company could also return any proceeds directly to shareholders. Pearson paid a dividend of 33.8 pence per share for 2008. (Editing by Paul Hoskins and Rupert Winchester)

$1=.6120 Pound

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