Pearson/eCollege.com Merger: Positive Development for Industry

Pearson Plc's (PSO) acquisition of eCollege.com (ECLG) is a very straightforward and complimentary one, which will give it entrance to the growing "e-learning" industry, where ECLG is a second-tier, yet growing entity. The fact that Pearson has virtually no presence in ECLG's markets is secondary to the fact that last year's merger between Blackboard (BBBB) and WebCT obtained HSR clearance almost a year ago in a merger of the top two players in the field. In other words, this deal will be viewed as a positive development in that it will essentially guarantee a stronger and more diverse entity to compete with Blackboard.

Market share data varies for the e-learning industry, but it is the consensus that Blackboard and WebCT practically dominated the growing industry even before their merger. On source cites the following market shares in the "course management systems" niche of the broader e-learning industry:

Given this data, it is almost difficult to believe that WebCT/Blackboard was allowed to proceed without major concessions, which did in fact happen. Conversely, it is simply inconceivable that this deal will raise any interest under HSR as, again, this can only be viewed as a positive development for the industry.

Given the all-cash nature of the deal and the fact that the SEC is clearing merger proxies at a very rapid pace these days, it would not be at all surprising to see this deal close in 75 days or less. At worst, the transaction will go three months, or by mid-August at the very latest.

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Comments

[Long-Short Guy:]

Interesting snippet on Pearson from Audible's transcript:
<blockquote>
<b>Audible Q4 2006 Earnings Call Transcript</b>

Donald R. Katz

The Vango notes study guides, for those who do not know about it, that are these very, very interesting products which are designed by the Pearson Higher Education group and packaged and marketed by us. They are meant to conform to the 200 best-selling college textbooks that they sell, and they are being sold by their channel sales force and also by Audible. The idea being that you put your iPod on and basically it walks you through a study guide experience of this very dense text. This is a huge, multi-billion dollar textbook market and it is very interesting.

It has been a fast-growing element of the business, although as you say, not hugely appreciable yet but the product is really just rolling out. I think it is going to be a very strong product and it is certainly getting well-received.
</blockquote>

Source:
internet.seekingalpha....

2007 Jul 23 01:01 AM