Acquisition

Pearson PLC
14 May 2007


14 May 2007


Pearson agrees to acquire eCollege(R) for $477m

Pearson, the international education and information company, today announces
that it has agreed to acquire eCollege(R) (Nasdaq: ECLG), a leader in the
fast-growing US online distance learning market. The net cost to Pearson is
$477m, consisting of a consideration of $538m ($22.45 per share) less $41m of
proceeds from the agreed sale of eCollege's Datamark division and approximately
$20m of net cash on eCollege's balance sheet. The transaction has been approved
by eCollege's Board of Directors and is subject to approval by its shareholders.

eCollege, founded in 1996, works with its partner educational institutions to
design, build and support online degree, certificate, diploma and professional
development programs. It provides a full range of on-demand software services
including course management, virtual campuses, and assessment, reporting and
retention monitoring tools. The company also provides a suite of support
services which include hosting, help desk, course development, technical
consulting, instructional design and faculty training.

eCollege supports approximately 180 institutions and its customers include some
of America's leading university and career colleges including DeVry University,
Kaplan University, Laureate, Texas A&M University at Commerce and Eastern
Michigan University. In 2006, student enrollments in its online courses were
approximately 1.2 million.

It has played a particular role in helping educational institutions broaden
access to postsecondary education for students who may be unable to attend
full-time. From 2002 to 2006, the number of students taking online postsecondary
qualifications with US institutions grew at a compound annual rate of more than
30% (source: Eduventures).

This acquisition extends Pearson's position as the world's leading education
company and supports its goals of building its digital and international
education businesses. eCollege is a pioneer in online distance learning, both in
the postsecondary and in the K-12 virtual schools segment, and it is the
industry leader in the fast-growing career college segment in the US. Pearson is
a pioneer in the use of technology to improve learning, with leading positions
in digital learning materials, student information systems, online testing, test
scoring and homework and formative assessment. In 2006, Pearson generated more
than $1bn of sales from these digital learning products and services.

Pearson expects the acquisition to strengthen both its own education business
and eCollege in three major areas:

 1. Pearson and eCollege share many customers in the higher education market.
    Together the two companies expect to provide customers with additional value
    and choice, and a full range of services across content, curriculum
    development, formative assessment and homework technologies and outsourced
    solutions. Pearson's publishing divisions will continue to work with third
    party commercial and open source course management providers, and eCollege
    will continue to work with third party publishers;
 2. Pearson's scale and reach will enable eCollege to serve new customers in
    school, post-secondary education and professional/ vocational markets, both
    in the US and around the world. Pearson has education companies in 55
    countries and in 2006 generated $1.6bn of sales in education markets outside
    the US; eCollege is building an international and fully multi-lingual
    e-learning platform;
 3. The two companies will reduce costs by eliminating eCollege's corporate and
    public company costs and gaining scale benefits of shared hosting, technical
    and support services.

In 2006, eCollege generated sales of $52m and operating profit of $22m before
central costs (and excluding the Datamark division). From 2003 to 2006, sales
grew at a compound annual rate of 22%. Pearson expects the acquisition to be
broadly neutral to adjusted earnings per share in 2008, its first full year, and
to enhance adjusted EPS and generate a return above Pearson's cost of capital
from 2009.

The transaction is expected to close in the third quarter of 2007. It includes
an agreement to sell the Datamark student enrollment business to a group of
investors led by Oakleigh Thorne, eCollege's chairman and CEO.

Matthew Schnittman, President of eCollege's eLearning division, will join
Pearson and continue to lead the company. It will operate as a separate unit
from Pearson's textbook publishing companies and will retain its offices in
Denver, Colorado.

Marjorie Scardino, Pearson's chief executive, said:

"eCollege will make Pearson an even stronger education company. It has been a
valued partner for some years, and we have the highest regard for its people and
their skills and commitment to serving their education customers. The
acquisition meets our financial goals and supports our strategy of combining
content, technology and services to advance learning."

Ends

For more information:

Luke Swanson/ Simon Mays-Smith:

14 May in London            [phone]
15 May in New York           [phone]







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