Pearson Education purchases AGS Publishing.

Pearson Education (Upper Saddle River, NJ), the international media and education company, today announced the acquisition of AGS Publishing (Shoreview, MN) from WRC Media (New York) for $270 million in cash, or almost 1.3x revenue of $210 million and 5.3x EBITDA of $50.55 million. Pearson said the deal will strengthen its "education business in two fast-growing segments of the U.S. School market: testing and publishing for students with special educational needs." The acquisition, which is subject to regulatory approval, is expected to be completed in the third quarter. AGS will become part of the Pearson School Companies.

AGS publishes assessments and curriculum materials for U.S. school psychologists, teachers and students and focuses on supporting students who are at-risk or performing below grade level, including those whose first language is not English. In school testing, AGS publishes a range of copyrighted assessments, administered by school psychologists or special education professionals with individual students, to assess areas including cognitive ability, educational achievement, speech/language and personal and social development. AGS also publishes a series of 'formative' assessments, administered in the classroom, to track student performance in reading and math towards 'Adequate Yearly Progress' under No Child Left Behind.

AGS sales have increased by more than 20% in both 2004 and the year to date. AGS's operating profit was $23m in 2004 before corporate overheads and is expected to increase as the business becomes part of Pearson. AGS's net asset value was $26m at 31 December 2004.

Steve Dowling, President of Pearson's School companies, said: "AGS reaches students with special education needs with individually and group administered assessments and fills out our curriculum offering from middle school to high school for low achieving students. This acquisition extends our position in a fast-growing market segment and adds to the intellectual property, growth and profitability of our school business." AGS's assessment products complement Pearson's Assessments & Testing business, a leader in psychological and educational assessments while AGS's curriculum-based instructional materials complement Globe Fearon, an imprint of the Pearson Learning Group. WRC units include Compass-Learning, Weekly Reader Corp. and WRC Consumer & Custom Publishing.