* Shares up 8 percent
* Review targets demerging engineered ceramics from performance materials
* Largest shareholder Cevian's (20 pct) Gardell to become board member
May 17 (Reuters) - Cookson Group Plc may break up into its two major divisions in an effort to improve shareholder returns and is to admit a partner from activist shareholder Cevian to its board, the British industrial materials supplier said on Thursday.
Christer Gardell, managing partner of Sweden-based Cevian Capital, which owns about a fifth of Cookson shares and has been building its stake since last year, will join its board as a non-executive director, Cookson said.
The review will look into a potential demerger of its two main divisions - engineered ceramics and performance materials -- and comes a few months after it sold its loss-making U.S. precious metals unit.
Talk of a Cookson demerger has circulated over the last few months as Cevian began building its stake in the company.
The engineered ceramics division, whose products are used in the glass and solar industries as well as by steelmakers and foundries, brought in revenue of 1.69 billion pounds last year.
The performance materials division, about half that size in revenue, supplies materials and chemicals to the electronics, automotive, industrial and construction markets.
Analysts welcomed the plan and the company's shares stood 8.8 percent higher at 643 pence at 0735 GMT.
"Management believes that following the substantial improvement at performance materials, the divisions can potentially be separated, which should drive further focus and performance," Alex Toms of BofA Merrill Lynch said.
Cookson said a separation of the two businesses may cost between 50 million pounds ($79.59 million) and 70 million pounds.
Trading for the first four months met the company's expectations. Trading profit rose slightly, despite continuing losses in its fused silica business, Cookson said in a trading statement accompanying the announcements.