Pearson soars on bid rumours

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Shares in Pearson, the media conglomerate, soared yesterday on speculation that it had once again become a takeover target and that it was contemplating breaking itself up to see off potential predators.

Reports that BSkyB, the satellite broadcaster owned 40 per cent by Rupert Murdoch, was considering a bid helped push the shares sharply higher in morning trading, hitting 745p at one point, a new high. By the end of the day, the price had moderated to 730p, still 33.5p ahead, as the market interpreted comments made by Sam Chisholm, chief executive, as indicating a bid was not imminent.

Pearson itself discounted the likelihood of a hostile approach, but analysts said BSkyB could easily afford Pearson, which might cost between pounds 5bn and pounds 6bn to win. The prime target of BSkyB's affections was believed to be the television subsidiary, run by Greg Dyke, which takes in Thames Television, Grundy Worldwide and SelecTV, the makers of Birds of a Feather. The rest of Pearson's sprawling holdings would be sold off.

"BSkyB has the distribution, but needs more original programming," Anthony de Larrinaga, analyst at Panmure Gordon, said. "Pearson Television has no real distribution."

Pearson has a 24 per cent stake in Channel 5, the planned fifth terrestrial channel. But the programming budget of just pounds 110m a year is unlikely to give the company much of a market for its programmes.

Several analysts suggested BSkyB might just be "shaking the cage", to see if a new management team at Pearson might be persuaded to sell the television subsidiary.

Last week, Pearson announced the appointment of Marjorie Scardino, chief executive of the Economist Group, as its new group chief executive, replacing Frank Barlow, who is retiring.

Ms Scardino has said she has "no strategic prejudices", and that there would be no sacred cows. Some observers have already reached the conclusion that she could be willing to sanction the sale of the television business and Madame Tussauds' to concentrate on the publishing and electronic media assets, including Penguin, the Financial Times, Addison-Wesley-Longman, the educational publishing imprints and Mindscape, the company's CD-Rom and game cartridge manufacturer.

It is understood that several options for the company had already been considered by consultants and advisers prior to last week's announcement of Pearson's management succession.

Analysts said yesterday it was inevitable Pearson would move to restructure its businesses, whether or not a takeover bid materialised. They suggested Pearson had still not streamlined its management structure and its array of assets, despite a radical overhaul of managerial responsibilities earlier this year.

Meanwhile, it emerged last night that Dennis Stevenson, the newly appointed deputy chairman of Pearson, had been the choice of at least three executive directors for the position of chairman, a role he assumes in April. His supporters were David Bell, John Makinson, finance director, and Greg Dyke. It is also understood that the original shortlist for chief executive included Mr Makinson and at least two outsiders - Bob Phillis, the deputy director-general of the BBC and Archie Norman, chairman of Asda.

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