London Risks Losing FTSE Giant Pearson To New York
London risks losing another major listed company after Pearson Plc’s largest investor said it should switch to the US to improve shareholder value.
(Bloomberg) -- London risks losing another major listed company after Pearson Plc’s largest investor said it should switch to the US to improve shareholder value.
Activist Cevian Capital AB, which earlier this year pressured Dublin-based building materials group CRH Plc to move its primary listing from London to New York, said it had singled out FTSE 100 constituent Pearson as the next company in its portfolio well suited for a move across the Atlantic.
“To change the listing is an easy and effortless way to increase the value of a company,” Christer Gardell, managing partner and founder of Cevian Capital, said in an interview.
“Pearson is a US company with the majority of sales and executives there. It’s only due to historical reasons it is still listed in the UK.”
Cevian is Pearson’s largest owner with a stake of more than 12%. Meanwhile, over a quarter of Pearson’s stock is held by US investors, according to data compiled by Bloomberg.
Following CRH, gambling company Flutter Entertainment Plc is listing in New York next month, while London was snubbed by British tech darling Arm Holdings Plc which chose a US listing despite lobbying from the UK government.
Travel company TUI AG said earlier this month that it could switch its primary listing from London to Frankfurt, while polling company YouGov Plc and trading platform Plus 500 Ltd. have said they could consider New York listings.
Pearson did not immediately respond to a request for comment.
Listing Strategy
Cevian, backed by billionaire financier Carl Icahn, holds large minority stakes in European companies such as ABB Ltd., Nordea Bank Abp, Ericsson AB, SKF AB and Rexel SA. In recent months its managing partner has said listing changes would be a key theme in the corporate restructuring market in the coming years.
Gardell said Cevian has had “really good experiences” from listing changes, not the least with CRH, which is by far Cevian’s best stock in the portfolio this year, with a 70% price gain.
Read More: Cevian Says Changing Listings Could Boost Valuations: ECM Watch
US Colleges
In 2022 Pearson earned 69% of its £3.8 billion ($4.9 billion) revenue in North America, where it’s historically been a major player in the college textbooks market and is now trying to parlay that into digital education services, now including artificial intelligence. That compares with just 11% from the UK.
“As most of the competition is based in the US, we see an upside to the share of 30-40% from a relisting,” Gardell said. “That’s a significant amount of shareholder value, so we expect the board and the management to look into this in a serious manner and to prioritize the issue.”
Britain’s lower tolerance of high executive compensation has sparked rebellions over the pay of departing CEO Andy Bird, with almost half of the company’s shareholders voting against his $11 million package last year.
Read More: Pearson Shareholders Rebel Against Pay Policy With 46% Opposing
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