The Foreign Investment Promotion Board is believed to have permitted Pearson Overseas Holding to initially acquire 13.85 per cent in Business Standard for about Rs 14 crore (Rs 140 million), subject to the condition that foreign holding in the newspaper does not cross 26 per cent and the largest Indian shareholder retains 51 per cent stake at all times.
Besides, since the proposed investment will mean Business Standard's paid-up capital exceeds its authorised capital, the company is required to comply with Company Act provisions for increased paid-up capital as well as for any fresh issue of shares, sources said on Monday.
As per the proposal, Business Standard will also make annual royalty payments to the London-based Financial Times as part of syndication and branding agreement, beginning with pound 47,447 in the first year, they said.
Pearson Overseas will purchase 10.5 lakh (1 million) shares of Business Standard from T N Ninan and Sevanti Ninan initially but can later increase their stake to the 26 per cent by buying Great Eastern Shipping Company, sources added.
In each of the first five years of the syndication pact, an annual royalty payment of 1.5 per cent of the incremental gross revenue over the financial year ended March 31, 2004.While granting its approval, the FIPB has also stipulated that all key executives and employees of the company shall be Indian nationals and that Business Standard shall take prior permission from the information and broadcasting ministry before effecting any changes in the shareholding pattern.
UK-based Pearson is a book, newspaper, magazine, television production and information services group.
Pearson brands include Australian soap opera Neighbours, children's character Peter Rabbit, leading UK business paper the Financial Times and Penguin books. In book publishing it is number one in the UK, Australia, New Zealand and India and number two in the US and Canada.