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TPG To Buy TSL Education For $600M

Target: TSL Education

Price: 400 million pounds

Sponsor: TPG Capital

Seller: Charterhouse

Financial Adviser: Goldman Sachs

Large educational publishers are on the lookout for smaller digital acquisitions as younger consumers in particular switch to digital content from print. The last such deal on the scale of TSL was Pearson’s takeover of online educational services provider EmbanetCompass in October for $650 million.

TSL did not disclose terms but two sources familiar with the deal said it valued TSL, which owns the Times Educational Supplement and also organizes conferences and exhibitions for the education sector, at about 400 million pounds ($600 million). TPG will raise 250 million pounds of debt, underwritten by Goldman Sachs and Jefferies, to help pay for TSL: 170 million pounds of senior leveraged loans, 60 million pounds of second lien loans and a 20 million pound revolving credit facility, bankers said.

“TPG’s global presence and extensive online experience fit well with the company’s ambitions and we anticipate accelerating growth through further investments in TSL’s digital capabilities,” TPG Managing Partner Karl Peterson said.

European private equity firm Charterhouse has owned TSL since 2007 and appointed Goldman Sachs to find buyers for it in December, one of the sources said. The TPG deal marks the third change of ownership in less than a decade for TSL — bought by Exponent Private Equity in 2005 from News International.

Education publishing is one of the largest sectors of the publishing industry. Nearly 85 percent of Pearson’s operating profit in 2012 came from education, and half its total sales are now from digital, software and education services. The acquisition, which is expected to close in the third quarter, was spearheaded by Peterson, who was formerly chief executive of Hotwire, a discount travel website.

Sebastian Sadr-Salek, Anjuli Davies and Claire Ruckin are correspondents for Reuters in London.