MARKET REPORT: Pearson soars as activist buys stake

Pearson surged on hopes an activist investor will help the education publisher turn the page on a dismal few years. 

Swedish investment group Cevian Capital revealed it has scooped up a 5.4 per cent stake in the group, which it said it had been watching closely for years. 

Cevian sees potential in the ailing textbook publisher, which has racked up six profit warnings in seven years and has struggled to move to a more digitally focused model. This has been even more necessary since lockdown measures were brought in across the world, increasing the need for elearning materials. 

Cevian’s co-founder and managing partner Christer Gardell is optimistic about its prospects – and believes one of the most important next steps will be to bring in a boss with ‘a clear track record of shareholder-value creation’ to replace John Fallon, who is due to retire later this year. 

Gardell said: ‘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,’ he added. 

The indication that Cevian is keen to see a shake-up at Pearson and even help steer it – it has a track record for investing in under-performing firms – received a warm welcome from investors. 

Shares in the group jumped 11.7 per cent, or 60p, to 573p – though are still down by around 10 per cent so far this year. 

Fellow Footsie -listed firm Informa shot higher after the conference organiser began preparing for the first post-coronavirus events in China. Shares rose 6.1 per cent, or 26.4p, to 466.6p on the news it plans to hold the China Beauty Expo in July. 

The group – which makes almost two-thirds of its revenue from its events business – has been forced to cancel more than 160 gatherings following disruption caused by the pandemic. 

The boosts from Pearson and Informa, alongside another seesawing rebound in hard-hit travel stocks, helped send the blue-chip FTSE 100 up 0.5 per cent, or 28.48 points, to 6105.18. 

The FTSE 250 rose 0.6 per cent, or 103.67 points, to 17077.34. 

Airline stocks were firmly in investors’ favour after Easyjet (up 5.9 per cent, or 44.8p, to 805p), British Airways-owner IAG (up 4.8 per cent, or 12.6p, to 275.5p) and Ryanair (up 1.5 per cent, or 17 cents, to €11.25) filed papers in the High Court launched a formal legal challenge to the Government’s quarantine rules, which would require those travelling into the country to self-isolate for two weeks. 

They argue the measures will ruin attempts to restart the tourism industry. Traders also toasted pub firms, with City Pub Group gaining 3.3 per cent, or 3p, to 95p after reporting annual results – including a 31 per cent increase in revenue to £60m – that it said will help it weather the Covid-19 storm. 

All Bar One and Harvesterowner Mitchells & Butlers rose 5.5 per cent, or 11p, to 212p after it secured £100m in coronavirus funding from the Government’s loan scheme, safeguarding some 45,000 jobs. 

Rubbish collector and recycling group Biffa closed down 2.6 per cent, or 5.5p, at 205p after it raised £100m from tapping investors for more cash, selling nearly 50m shares about 200p each. 

Elsewhere, books and stationery retailer The Works said it had seen ‘very strong’ demand for online sales, which are more than three times higher than the same period of last year. 

Shares in the group, which is preparing to reopen 465 stores in the UK and Ireland next week, climbed 0.8 per cent, or 0.2p, to 25.7p.