Pearson Plc (NYSE:PSO) moved up $0.79, or 5%, to $16.46 during the past two days on speculation that the company could be the target of a leveraged buyout. "The Business" fueled this speculation after reporting that private equity firm Kohlberg Kravis Roberts (KKR) was considering a $13.7 billion bid for the publishing company - a 4% premium to yesterday's close. However, Stifel Nicolaus discredited this rumor by stating: "Our SOTP analysis suggests the company can do better. Based on purchase price multiples involving comparable assets in recent transactions, we derive a fair value ranging from $17 at the low end to $23 at the high end. We would also note that according to the report, KKR has yet to make contact with Pearson, and thus Ј7 billion is merely a number at this point". Currently the company is trading below enterprise value with $1.59 per share in cash and very little debt. While this makes PSO an attractive takeover target, the company's PEG of 2.15 makes it somewhat overvalued. Regardless, this is definitely a stock worth watching.

Pearson plc. The Group's principal activity is providing information for the educational sector, consumer publishing and business information. It operates through its five business segments, School, Penguin, Higher Education, FT Publishing and IDC. Also, it has a business group, Professional. It brings together a number of education publishing, testing and services businesses.

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