MEDIA group Pearson, owner of the Financial Times, Penguin books, Tussauds and Pearson TV, beat off the opposition to clinch a net #2200m deal to buy the bulk of publisher Simon & Schuster from US entertainment group Viacom.

The whole transaction, which is subject to regulatory approval, is worth #2800m, but Pearson will claw back #617,000 by selling part of the business to an American investment group.

The acquisition will make Pearson the world leader in educational publishing and was greeted with great enthusiasm in the market, where its shares closed up 81.5p at 1028p, having touched a record high of 1036p.

Earnings per share will be boosted in the first year and there are expected to be annual cost savings of #80m by the year 2000 from the integration of Simon & Schuster into Pearson's Addison Wesley Longman subsidiary. But it will also leave the company with hefty debts. Including the acquisition and other recent deals, Pearson said it would have pro forma net debt of roughly #2500m.

As a result, Pearson's chief executive, Marjorie Scardino, is expected to accelerate the sale of Pearson's non-core assets, a process which has so far reaped more than #650m.

Scardino said: ''Education is one of the great growth industries of our time. This is a tremendous opportunity to meet, in print and electronically, the growing demand of students of all ages and in all parts of the world for stimulating and effective educational programmes.''

One analyst said: ''The Simon & Schuster deal puts pressure on Pearson to do more disposals,'' and cited Pearson's minority stakes in pay-TV channel company Flextech and satellite broadcaster BSkyB as the most likely disposal candidates.

The company's estimated 4.5% stake in BSkyB could fetch about #320m, while its 4,800,000 shares in Flextech were valued at about #25m, analysts said.

In addition to asset disposals, Pearson said it would consider issuing equity of up to 10% of its share capital to help refinance its debt.

Since taking over as chief executive early last year, Scardino has focused on streamlining Pearson's mixed bag of assets, which also includes a stake in Lazards bank (50%), and US television soap Baywatch.

The Simon & Schuster acquisition reflects her strategy to make Pearson a major player in its three core areas - business information, television and entertainment, and educational publishing.

This strategy - coupled with Scardino's aggressive earnings goals - has propelled Pearson's share price over the past year, making it one of the top performers in the media sector.

Although most analysts agreed that Flextech and BSkyB were next in line for disposal, they were divided over the future of Pearson's stake in Lazards and the company's Tussauds Group entertainment division.

Regarding Lazards, Scardino has pointed out that owning part of an investment bank was not an ideal situation for a company which was seeking to focus on media.

However, many analysts argue that Pearson would have a hard time selling its Lazards stake at a premium since the bank's representatives also sit on Pearson's board.

''Lazards directors are unlikely to be willing to pay much of a premium for their own goodwill,'' one analyst said.