Pearson Plc, the world's biggest educational publisher, agreed to buy eCollege.
com for $538 million to add online degree courses in the United States.
Shareholders of eCollege will receive $22.45 per share, London-based Pearson said Monday in a statement. That's 7.1 percent more than the May 11 closing price for the Chicago-based company's shares.
ECollege, founded in 1996, works with about 180 U.S. colleges and universities to offer degree, certificate and diploma programs. Pearson is expanding its education business through acquisitions, including its May 4 agreement to buy Reed Elsevier's Harcourt unit for $950 million.
"The acquisition meets our financial goals and supports our strategy of combining content, technology and services to advance learning," Pearson Chief Executive Officer Marjorie Scardino said in the statement.
Pearson, which also owns the Financial Times newspaper and publisher Penguin Group Inc., competes with McGraw-Hill Cos. and Houghton Mifflin Co. in providing textbooks, test marking and online materials.
Pearson will get $20 million of cash on eCollege's balance sheet and $41 million of proceeds from the sale of eCollege's Salt Lake-based Datamark student enrollment business to a group of investors led by Oakleigh Thorne, eCollege's chairman and chief executive officer, according to the statement. The cash will give Pearson a net purchase cost of $477 million.
ECollege had 1.2 million students enrolled in online courses in 2006. The company had sales of $52 million and profit excluding some costs of $22 million last year. The acquisition should be done by the third quarter of 2007, Pearson said.
Pearson said last month that revenue growth is meeting its targets for 2007. The company expects "good" earnings growth for the full year.
Contributing: Ville Heiskanen