Pearson shares jump after activist reveals stake

Pearson shares jumped on Friday after an activist investor revealed it had bought more than 5% of the struggling education company as it seeks a new boss.

The company's shares rose more than 9% to 560.20p at 09:16 BST and were the biggest gainers in the FTSE 100 after Cevian Capital disclosed it had built a 5.4% stake.

In a filing in the US, Cevian said it "has discussed and intends to continue to discuss numerous operational and strategic opportunities to maximise shareholder value with [Pearson's] board of directors and/or management, including, without limitation, opportunities to improve management."

The Stockholm based investor said it would monitor Pearson's operations, governance and management and strategic matters such as the sale of the company or parts of its business and its capital structure.

Cevian manages more than €13bn and pushes for change at companies in which it invests. It usually seeks board representation. The stake makes it Pearson's fifth-biggest investor.

The fund bought the stake to influence Pearson's choice of a new chief executive to replace John Fallon, who will leave in 2020 after seven years in charge. The investor wants the new boss to overhaul strategy and improve profitability to turn around weak share performance and a string of profit warnings, according to Bloomberg.

Fallon sold the Financial Times and Pearson's stake in book publisher Penguin Random House to concentrate on educational publishing and shift to digital products. The company has been hit by falling sales of textbooks in the US but Fallon has said the Covid-19 crisis increased demand for digital products.

Pearson shares lost more than a third of their value in 2020 before Friday's rise and are have more than halved since Fallon became CEO. The company has been in "constructive, ongoing dialogue with Cevian for several months", the company told Bloomberg.