Pearson, the Penguin books-to-Financial Times media group, is to take over US education services group National Computer Systems in a £1.67 billion deal.

The company said it would integrate NCS with its own Pearson Education division to create "a world-leading integrated education company".

Pearson said the combined group would connect schools and homes and enable parents to play a more active role in the education of their children.

The integrated business will deliver savings of around £33 million a year by the end of 2002.

Marjorie Scardino, chief executive of Pearson, said: "NCS is a superb company in its own right with a record of delivering consistently high levels of innovation and growth.

"Together we can transform our business into one that can reach further and faster."

Pearson also unveiled a 32 per cent increase in operational profits before exceptional items and internet enterprises at its half-year stage.

The company said its business titles in the Financial Times group had generated strong advertising and circulation growth with underlying sales increasing by 24 per cent.

Its internet ventures also experienced strong revenue growth and were set to break even by 2002, two years ahead of schedule.

Its Penguin division also performed well, publishing a record number of new best-selling titles.

The company said the integration of its recent acquisition of rival publisher Dorling Kindersley was going ahead "rapidly" and would bring new opportunities across all its media operations.

Overall profits before tax for the six months to June 30 were £123 million compared with a loss of £20 million last time round. Sales were £1.49 billion against £1.31 billion.