British media group Pearson has emerged as the frontrunner in the bidding for the educational publishing arm of Viacom’s Simon & Schuster, while former contender Harcourt General has reportedly called it a day.
According to sources close to the auction, which wraps this Wednesday and is expected to fetch between $4 billion and $5 billion, the other remaining players in this last leg of the highly visible competition are two investment groups — Kohlberg Kravis Roberts and Hicks, Muse, Tate & Furst — and former investment banker Michael Milken.
This list leaves Pearson the only publisher still in the contest. Through its Addison Wesley Longman unit, Pearson already controls a substantial portion of the college market and a sizable share of the K-12 (kindergarten through 12th grade) market.
Sources say the Justice Dept. would not fail to notice a buyout by Pearson of what is considered the “crown jewel” of the S&S publishing empire.
“It all depends on how they look at it,” said one close observer. “Do they look at the educational market as a whole or focus on individual disciplines within it?”
Pearson, which has been named as a bidder ever since Viacom chief Sumner Redstone confirmed there would be an S&S sale (Daily Variety, Jan. 15), admitted Monday that it was “considering the opportunities arising from Viacom Inc.’s planned disposal.”
But the only real surprise since Redstone’s confirmation has been the surfacing of deposed junk-bond king Michael Milken, who, according to reports, may go after all of S&S and not just that which is formally on the auction block.
Milken is expected to make his final bid through Los Angeles-based Knowledge Universe — also backed by Oracle Corp. chairman Lawrence Ellison and other high-profile investors — which plans to develop all sorts of children’s media.
Although the deadline is just hours away, a source close to the publisher said the actual winning bid may not be identified immediately.
“We’re probably talking days instead of weeks,” he said, stressing that Viacom would be trying only to identify the right bid — through all the attendant legalese — and not playing coy by withholding it.