Activist investor Cevian takes stake in Pearson
Swedish group bets on potential for new management to turn round struggling education group
Europe’s biggest activist investor has built a significant stake in Pearson, betting on the potential for new management to turn round the struggling education group.
Cevian Capital, the Swedish investor that has previously targeted companies such as Thyssenkrupp and Nordea, bought 5.4 per cent of Pearson and said on Friday it expected a new chief executive to realise the company’s “full potential”.
Pearson, which is undergoing a painful transition towards digital products and services, has endured six profit warnings under its longtime chief executive John Fallon. He has previously announced his departure from the company but a successor has yet to be appointed.
Shares in Pearson jumped 11.6 per cent to £5.72 after news of the Cevian stake emerged.
Christer Gardell, co-founder of Cevian, said he had “followed 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,” he said in a statement. “Based on our analysis, we see no reason Pearson’s businesses shouldn’t outperform their competitors, and produce attractive, growing and predictable returns.”
He called for the appointment of a chief executive “with a clear track record of shareholder-value creation”.
Describing itself as an “engaged” shareholder rather than an activist, Cevian has taken stakes in European companies from Ericsson and Volvo Group to ABB, often seeking board appointments. Its chairman is Paul Myners, the Labour peer and former Treasury minister.
Since widespread lockdowns began Pearson has sought to stress the promise of its online learning products, a line of business that is an increasing focus for the company as it moves away from the lacklustre US market for textbooks.
“We think Pearson has a compelling set of assets exposed to a very interesting and dynamic global sector while also enjoying a strong balance sheet,” said Thomas Singlehurst, analyst at Citi.
“The standalone investment case is sadly, however, largely overlooked by an overwhelmingly bearish consensus. It is not clear what direction an activist investor will take Pearson, but we do see significant value and its very presence could be a positive catalyst to realising this,” he said.