Shares in education publisher Pearson jump 20% on hopes of private equity bid

theguardian.com:

Pearson’s market value jumped by as much as a fifth after a US private equity group said it was considering making a cash offer for the educational publisher.

News of the possible offer from Apollo sent shares in Pearson, which is finally emerging from a seven-year slump marked by a string of profit warnings and a record £2.6bn loss, up 20%, making it the top riser on the FTSE 100 on Friday.

“Apollo is in the preliminary stages of evaluating a possible cash offer by certain of Apollo’s affiliated funds for Pearson,” the private equity company said. “There can be no certainty that any offer will be made, nor as to the terms on which any such offer might be made.”

Pearson’s market value increased by nearly £1bn to £6bn after Apollo’s announcement. Apollo now has until 8 April to announce a firm intention to make an offer or to withdraw, according to UK takeover rules.

Pearson has been on a steady recovery path since being caught out by the seismic shift of students in the US, its biggest market, away from buying its new academic titles to snapping up secondhand titles and ebooks.

The shift to a digital-first model began under its previous chief executive, John Fallon, who stepped down in 2020 after almost eight years.

Its new head, Andy Bird, the former chair of Walt Disney’s operations, has doubled down on that approach, launching a Netflix-style subscription service, called Pearson+, at the heart of the company’s strategy.

Bird has said Pearson also plans to take advantage of the pandemic-induced “great resignation”, as more employees leave jobs and learn new skills.

Pearson reported an adjusted operating profit of £385m last year, an increase of a third over 2020.

Europe’s largest activist investor, Cevian, has a 10% stake in