The Competition Commission on Friday said it had imposed a post-merger procurement condition for the deal for JSE-listed printing and manufacturing company Novus Holdings’s subsidiary to acquire a majority stake in Pearson SA to get the green light.
Pearson is a courseware business that services all tiers of the education market.
Novus Holdings concluded an agreement on August 12, with its subsidiary, Novus Print Proprietary, to purchase a 75% equity share of Pearson SA with a base consideration of R829.4 million.
The remaining 25% of Pearson SA's share capital is held by black economic empowerment (BEE) partners, Sphere RB Investments (22.5%) and Pearson Marang Education Trust (2.5%), which shareholding and BEE arrangements remain in place following the acquisition.
“The commission found that the proposed transaction may result in both competition and public interest concerns. From a competition perspective, the commission found that since the merged entity will be vertically integrated, Pearson SA may receive preferential print prices which will give them an advantage over downstream competitors.
“In order to address this specific concern, the merger parties offered and agreed to a pricing remedy to the effect that Novus Print will not supply printing services to competitors of Pearson SA at prices less favourable than the prices paid by Pearson SA to Novus Print for services of similar grade and quality in equivalent transactions for five years post-merger,“ the commission said in a statement on Friday.
It also said to address any employment concerns that might arise as a result of the merger, the merging parties agreed to the imposition of a five-year moratorium on merger-specific retrenchments post-merger.
If any positions become available within the merging parties within three years from the date of approval of the merger, Novus Print would also consider employing its former employees who had been retrenched in 2022, in circumstances where their skill sets were similar to or suitable for, the relevant positions that might become available, it said.
Novus shares on the JSE on Friday rose 1.06% to R3.80. The shares of the firm, with a market value of R1.3 billion, have risen 49.02% in the past three years.
Novus Print’s publishing activities primarily involve magazine publication in the commercial and consumer space. Its products include in-flight magazines, community magazines, digital magazines, internal publications, and trade publications. The Novus Group also prints educational material.
The Pearson SA business involves the publishing and sale of educational materials, teacher training and other educational solutions (print and digital) for kindergarten to Grade 12 (K-12), and higher education. The key brands within the Pearson SA business include Pearson, which focuses on higher education, as well as Heinemann and Maskew Miller Longman which both focus on the K-12 segment.
In August Novus explained that during the past three years it had embarked on a process to reposition and restructure the group following market changes in its traditional print business.
The opportunity to acquire the majority of the Pearson SA business followed Pearson’s decision to divest the international courseware local publishing businesses.
Pearson SA, being the owner of extensive education related intellectual property, serves all tiers of the education market in South Africa, with a primary focus on schools.
“While the paper based textbook business is expected to remain a significant part of the education system, Pearson SA have also been pro-active in developing solutions to provide digital content to assist its stakeholders and students to participate in the migration to digital educational platforms,” it said at the time.
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