August 31, 2011 10:40 pm

Shareholders seek board reshuffle at Reed

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Leading investors in Reed Elsevier are urging another boardroom change almost two years after a new chairman and chief executive were brought in to turn round the publishing group.

Pressure is building on the board of the FTSE 100 group to replace Mark Armour, the finance director, who has been in the job since 1996.

Two of the group’s top 10 shareholders have told the Financial Times that they plan further meetings with chairman Anthony Habgood, who joined in June 2009, to discuss the performance of the group and of Erik Engstrom, the chief executive brought in at the end of 2009.

They are not calling for Mr Engstrom’s resignation but said a new finance officer was needed to provide the group with more impetus.

“The company has not delivered against expectations almost continually,” said one of the 10 investors. “It keeps missing targets and disappointing us. It has a good portfolio of businesses that are massively undervalued.”

Reed Elsevier declined to comment.

Shares in Reed have fallen 7.6 per cent since the start of the year.

Reed has outperformed the All Share Media sector, which is down 11 per cent, by almost 4 per cent this year. But the company is trading on 9.5 times forward earnings, far behind its 14.7 average over the past decade.

A third top 10 investor who has been buying shares in the belief that Mr Habgood and Mr Engstrom were “quietly delivering on strategy”, agreed that the finance director “ought to move on”.

Mr Armour was a close ally of Sir Crispin Davies, Reed’s former chief executive, as he sought to turn the company from a print publisher to an online information provider.

One media analyst said: “Investors have had justifiable concerns over the group’s M&A track record. Reed made a foray into education over 10 years ago and ended up selling the education assets at a huge loss.”

Reed sold its education business close to the peak of the market. It returned the proceeds to shareholders, however, leaving its balance sheet stretched when it then announced the $4.1bn acquisition of Choicepoint, the insurance services business.

Ian Smith, former chief executive of Taylor Wimpey, succeeded Sir Crispin. But Mr Smith stepped down eight months into the job.

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