Addison-Wesley to Be Bought for $283 Million

Britain’s Pearson PLC, publisher of the Financial Times, is expanding its presence in the United States by acquiring Addison-Wesley Publishing Co., an educational publisher in Reading, Mass., for the premium price of $283 million.

The agreement values Addison-Wesley’s shares at $105, nearly double the current price in the New York over-the-counter market, the British company said Monday.

London analysts said Pearson might be willing to pay a high price for Addison-Wesley, the sixth-largest U.S. publisher of college textbooks, as part of a round of acquisitions to lessen its attractiveness as a takeover candidate. Australian-born publisher Rupert Murdoch has built up a 20.5% stake in Pearson in recent months.

Pearson Chairman Lord Blakenham stressed at a news conference that the addition of Addison-Wesley fitted in well with Pearson’s own publishing operations and would help the British firm become a truly international publisher.

Addison-Wesley, looking for capital to expand, put itself up for sale at a private auction and Pearson was the highest bidder of the seven firms the American company approached, Blakenham said.

He noted that Pearson had targeted Addison-Wesley, the ninth-biggest publisher of textbooks in the United States with 1987 sales of $167.4 million, as a possible acquisition in 1981.

Addison-Wesley’s shares closed at $54.50 on Friday, but investors did not have a chance to respond to Monday’s news because the U.S. stock markets were closed for the Washington’s Birthday holiday.

Pearson executives said the acquisition will make their company--which also publishes Penguin books--one of the world’s five largest English-language publishers.

Even more important, they say, it should make their company a leader in publishing science, engineering and computer books. Addison-Wesley will merge with Pearson’s educational books subsidiary, Longman, to form a new company, the Addison-Wesley-Longman Group.

“Addison-Wesley has long been identified as an ideal merger partner and today’s agreed offer will transform Longman,” Blakenham said. About 70% of Longman’s revenue of $261 million are derived outside Britain.

Blakenham said neither this purchase nor the recently announced $150-million acquisition of the Parisian financial daily Les Echos were done in response to a possible takeover threat by Murdoch.

But analysts note that companies fearing unwelcome takeover bids often make big acquisitions, feeling that taking on new businesses and increasing their debt makes them less attractive targets.

Pearson last year also acquired Datasolve, a leading British news data bank, and last month took a 25% stake in Canada’s Financial Post.

James Joll, Pearson finance director, said the payment for Addison-Wesley would be met out of cash resources and a recently signed $522-million loan agreement.

Joll said the acquisition of Addison-Wesley would take Pearson from a positive cash position in 1987 into a “comfortable” level of debt.

Murdoch said last year when he acquired his initial 10% stake in Pearson that he would refrain for at least a year from making a bid for the group.