Pearson sells 22% stake in Penguin Random House

Penguin books Image copyright Reuters

Shares in Pearson have slid 5% after it sold a 22% stake in book publisher Penguin Random House for $1bn (£776m).

Pearson has sold the stake to its partner in the Penguin Random House business, Bertelsmann.

Following the deal, Bertelsmann will hold 75% of the business while Pearson will retain a 25% stake.

Pearson said it would return £300m to shareholders following the sale, but the firm's shares reversed early gains as analysts expressed their concerns.

Analysts at Liberum said "not all the details of the transaction look great and the deal still does not solve the fundamental problems".

Pearson has struggled of late, having issued several profit warnings and reported a record loss earlier his year.

The slide in Pearson's share made it the biggest faller on the FTSE 100, with the share index down 40 points, or 0.55%, at 7,329.76 at close.

Elsewhere in the market, shares in Marks and Spencer fell 4.7% after the retailer reported a further drop in sales.

Like-for-like sales at its clothing and home division fell 1.2% in the three months to 1 July, which was not as bad as the 5.9% drop in the previous quarter. However, food sales dipped 0.1%, which was worse than expected.

In the FTSE 250, shares in Galliford Try rose 8% after the housebuilder said it expected full-year profits to be at the top end of forecasts.

But it was another bad day for Carillion, which saw its shares sink a further 33%. On Monday, Carillion's shares lost nearly 40% after it warned its sales would be below expectations and said its chief executive was standing down.

On the currency markets, the pound fell 0.25% against the dollar to $1.2850 and was 0.5% lower against the euro at 1.1244 euros.

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