June 12, 2020 / 9:03 AM / 2 months ago

Pearson shares jump 11% as activist Cevian discloses stake

STOCKHOLM (Reuters) - Shares in Pearson (PSON.L) jumped 11% on Friday after activist investor Cevian Capital disclosed a 5.4% stake in the British education publisher, lifting expectations for a performance boosting shake-up at the company.

Cevian Capital, which holds large stakes in companies such as Ericsson (ERICb.ST), ABB (ABBN.S) and CRH (CRH.L), said it had been following Pearson closely for several years.

“The company has a collection of leading businesses in attractive markets, but several of these businesses have yet to deliver on their full potential,” Cevian Managing Partner and co-founder Christer Gardell told Reuters.

“Based on our analysis, we see no reason Pearson’s businesses shouldn’t outperform their competitors, and produce attractive, growing and predictable returns. This will require first-rate decision-making and robust execution”.

Pearson shares are still down 11% so far this year.

JPMorgan analysts said in a research note its own sum of the parts valuation highlighted “the potential for disposals, releveraging and significant cash returns”.

Cevian’s Gardell said he expected Pearson to appoint a CEO with “a clear track record of shareholder-value creation” to replace current CEO John Fallon, who is due to retire later this year.

Cevian often targets companies with weak profitability and complex structures, providing opportunities to improve returns through measures such as cost-cutting, divestments, spin-offs and management change.

Reporting by Johannes Hellstrom;Editing by Elaine Hardcastle

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