Monday 3 August 2020 11:45 am

Activist investor ups stake in Pearson ahead of boardroom grab

Europe’s largest activist investor has upped its stake in education publisher Pearson to almost nine per cent, signalling plans to push for a seat on the board.

Swedish-based Cevian now owns 8.5 per cent of the FTSE-listed education firm, up from seven per cent a fortnight ago and making it Pearson’s third-largest investor.

Read more: Pearson shares rocket as Cevian Capital snaps up stake

Cevian scours global markets for companies such as Pearson that seem to be either undervalued or unperforming compared to their full potential.

The activist investor has said Pearson is yet to fulfil its full potential under outgoing boss John Fallon, and is ripe for digital revolution.

Pearson has seen a 56 per cent share price fall since Fallon took over in 2013, with shares falling from around the 1,200p mark to yesterday’s close of 529p.

The company last week said its search for a new chief executive was “well advanced” as it seeks to reassure investors ahead of a leadership change in December.

The educational publisher has had a rough ride during the pandemic, with a slump in demand from school closures causing a 17 per cent plunge in sales for the six months to 30 June.

Pearson recorded an adjusted operating loss of £23m for the first half of 2020, compared to an operating profit of £144m a year earlier. 

However, Cevian is holding out hopes that growth in Pearson’s digital operations could augur well for future strength.

Read more: Pearson swings to a loss as pandemic forces schools to close

The publisher saw higher demand for digital learning products such as online degrees during lockdown, and now predicts a bounce back in the second half of the year as demand for educational resources rebounds.

Cevian has said Fallon’s successor should have a “clear track record of shareholder-value creation”, suggesting it would not back an insider in the top job.

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