Pearson snaps up one-time multimedia star Dorling Kindersley

UK media conglomerate Pearson, owner of Penguin Books, the Econmist and the Financial Times, has agreed to buy troubled publisher Dorling Kindersley for $311 million. The acquisition is a straightforward cash deal, with Pearson offering 430 pence for each DK share. That's four per cent more than yesterday's closing price of 413.5 pence. DK's shares have been rising since 26 January, when the company said it was looking for a buyer. That announcement came a week after it issued a profit warning. At one point, free ISP Freeserve was seen as the likely buyer, with its eye on DK's Web content. DK's finances were hit hard after a lucrative Star Wars: Episode One publishing contract proved... well... not very lucrative. Sales of merchandising - at least in the book business - came nowhere near their anticipated levels, leaving DK with a Death Star-sized pile of unsold items. The company's ill-fated attempts to extend its success in the mid-90s CD-ROM arena into the late-90s Internet world, didn't help much either. In total, the company lost $23.8 million in the six months to 31 December 1999 - the year before it was in profit, to the tune of £3.1 million - despite an increase in sales, much of it before last June's release of Episode One, we suspect. The Pearson takeover is expected to take place within six weeks' time, and will see the departure of founder Peter Kindersley as a company executive. Pearson hasn't said what it plans to do with DK, but as an aggressive pursuer of Internet business, it's likely to beef up DK's own Web and multimedia operation. ® For more UK Internet financial news, visit Cash Register