FTSE 100 movers: Micro Focus surges on HP deal; Pearson slumps

London’s FTSE 100 was down 0.2% to 6,830.67 in afternoon trade.

Education publisher Pearson was under the cosh after US peer John Wiley & Sons slid nearly 7% on Wednesday following the release of disappointing first-quarter results.

Liberum said the drop in the John Wiley shares was primarily driven by the company’s comments on its education business, which saw a 14% decline in overall revenue and a 34% fall in printed book revenue.

“The comments from Wiley suggest a market that is seeing increasing structural pressure; interestingly, there were also no comments from management suggesting the weakness was due to enrolment factors, which has been Pearson’s explanation for problems in its US Higher Education business, which is our biggest area of concern with the shares (estimated 45% of group profits).”

Liberum reiterated its ‘sell’ rating and 470p price target on Pearson, saying it expects another profit warning from the company.

Admiral and Standard Life were in the red as they went ex-dividend.

On the upside, Micro Focus International surged after agreeing an $8.8bn deal to merge with US giant Hewlett Packard Enterprise's software business, including a $400m return of value to the FTSE 100 company's shareholders.

The UK company will issue American Depository Shares (ADSs) to shareholders in Hewlett Packard Enterprise (HPE), which was spun out of its more famous hardware parent in October 2015, so that once the deal is complete, the US corporation's shareholders will own 50.1% of the combined entity.

Airline stocks IAG and EasyJet flew higher after EZJ’s chief executive officer Carolyn McCall said financial markets had overreacted to the UK’s decision to leave the European Union.

Dixons Carphone advanced after it said group revenue in the first quarter grew 9% on the year, while like-for-like revenue improved 4% in the 13 weeks to 30 July.

Provident Financial was in the black as Jefferies initiated coverage of the stock at ‘buy’. “We believe that PFG's broad expertise in non-standard lending, solid underwriting standards, expertise in collections and high customer satisfaction make it a sustainable player in a high return on equity but under-banked market.”

Rio Tinto gained after RBC Capital Markets bumped the stock up to ‘outperform’ form ‘sector perform' saying it provides the most attractive valuation in the sector, along with “best in class” growth.

Risers

Micro Focus International (MCRO) 2,329.00p 19.13%
International Consolidated Airlines Group SA (CDI) (IAG) 421.40p 3.79%
easyJet (EZJ) 1,195.00p 3.55%
Dixons Carphone (DC.) 387.00p 3.42%
Provident Financial (PFG) 3,031.00p 2.47%
Anglo American (AAL) 858.50p 2.18%
Rio Tinto (RIO) 2,381.50p 2.04%
BHP Billiton (BLT) 1,016.50p 1.75%
BT Group (BT.A) 395.55p 1.42%
Merlin Entertainments (MERL) 494.60p 1.29%

Fallers

Pearson (PSON) 806.50p -6.60%
Admiral Group (ADM) 2,008.00p -2.48%
Burberry Group (BRBY) 1,289.00p -2.05%
Mediclinic International (MDC) 979.50p -1.80%
Standard Life (SL.) 355.10p -1.74%
Rolls-Royce Holdings (RR.) 755.00p -1.56%
GKN (GKN) 321.20p -1.17%
Morrison (Wm) Supermarkets (MRW) 198.00p -1.10%
Tesco (TSCO) 169.50p -1.02%
Land Securities Group (LAND) 1,076.00p -0.83%