MARKET REPORT: Bid talk propels Pearson shares to the top of the class

Shares in Pearson jumped to a seven-month high as speculation mounted of a fresh takeover bid.

The stock rose 8.7 per cent, or 65.8p, to 826.8p amid market chatter that the education media group could receive a new offer after it revealed last week it had rejected two swoops by US private equity giant Apollo Global Management.

Pearson turned down an approach worth 800p per share or £6.1billion in November and an improved bid of 854.2p a share, or £6.5billion, last Monday.

The firm had concluded that, despite the increase, the Apollo offer ‘significantly undervalued the company and its future prospects’ and its board had rejected it unanimously.

However, many predict a third approach could be incoming.

Roddy Davidson, an analyst at broker Shore Capital, said: ‘[Pearson is] a fairly unique asset in an area that has already seen a degree of consolidation.

‘It’s an interesting time to be looking at the company as it does feel like the supertanker has finally been turned with long-running issues in US higher education much less prominent and its digital transition taking hold.’

Berenberg analyst Sarah Simon said a higher bid from Apollo would be ‘the logical conclusion’.

The FTSE 100 dropped 0.3 per cent, or 17.77 points, to 7175.70 while the FTSE 250 was down 1 per cent, or 213.59 points, at 20,257.66.

The bloodbath on Chinese markets continued for a second day as a Covid outbreak and its stance on the invasion of Ukraine sparked fears of a downturn that could spread to the wider economy.

Stock Watch – Wilmington

Wilmington hit its highest level in nearly five years after it hiked its profit forecasts.

The firm, which provides education and training on corporate governance and compliance, noted that its major face-to-face event in the US, Rise National, had taken place successfully.

As a result, profits for the year to the end of June are expected to be at least 10 per cent higher than previous market expectations of £18million to £18.1million. 

The upgrade sent the shares up 4.4 per cent, or 11p, to 260p.

‘Investors might have become too complacent over the risks of lockdowns returning once again,’ said AJ Bell investment director Russ Mould.

Hong Kong’s Hang Seng Index fell 5.7 per cent, sending it down nearly 21 per cent for the year-to-date, while the Shanghai Composite dropped nearly 5 per cent. 

Oil prices also continued to decline with Brent crude dropping below $100 a barrel at one point. Shell shares rose 0.7 per cent, or 13.2p, at 1940p while BP climbed 1.3 per cent, or 4.5p, to 361p.

Trading broker TP ICAP tumbled 15.3 per cent, or 20p to 111p after an 80 per cent fall in full-year profits.

Pre-tax profit for 2021 came in at £24million, down sharply from £129million the previous year as a reduction in market volatility dented demand for the group’s services. 

It also flagged up a £4million hit from sanctions imposed on Russia following the invasion of Ukraine.

Blue-chip exhibitions group Informa gained 3.4 per cent, or 18.6p to close at 568.8p as it swung back into profit. 

It reported profits of £137.1million for last year, up from a £1.1billion loss in 2020, as the loosening of lockdown restrictions lifted demand for in-person events.

DIY retailer Wickes slumped 2.3 per cent, or 4p, to 171p after announcing a ‘short delay’ to the release of its full-year results.

Auditors KPMG had requested more time to complete their assessment of the group’s annual reports and accounts.

National Grid gained 2.9 per cent, or 32.2p, to 1155.4p after selling its stake in the St William Homes joint venture to its partner, housebuilder Berkeley (down 2.5 per cent, or 97p, at 3843p), for £412.5million.

The two firms have also signed several agreements for Berkeley to buy additional sites owned by National Grid for around £270million.

Meanwhile, plumbing and heating specialist Ferguson doubled its share buyback to £1.5billion and hiked its interim dividend by 15 per cent to 64p per share following strong first-half results.

Profits for the six months to the end of January soared 68 per cent year-on-year to £991million while sales jumped 29 per cent to £10.2billion. Its shares fell 6.2 per cent, or 720p, to 10,950p.