UPDATE 1-ISS hires Danske Bank's Aarup-Andersen as CEO

* ISS hires Danske Bank executive as new CEO

* Shares jump 12.5% on news but are down 50% over past year

* Hiring of banker reignites take-over debate -analysts (Adds share performance, analyst)

COPENHAGEN, May 18 (Reuters) - Danish services provider ISS said on Monday it had hired Danske Bank’s Jacob Aarup-Andersen as its new chief executive officer, sending its shares up more than 12%.

Aarup-Andersen, 42, who currently heads Danske’s Danish banking unit will replace incumbent CEO Jeff Gravenhorst who will retire on Sept 1.

ISS’ shares jumped 13.5% in early trading and were the second-best performing on the STOXX 600 index.

The stock has still shed roughly half its value over the past year as the company, which delivers services such as cleaning and catering to more than 200,000 clients in 63 countries, has issued several profit warnings.

“ISS’ performance and share price have consistently disappointed over the past 3 years, leading to debate as to whether the company may be re-taken private. In our view, hiring a banker as CEO will likely re-ignite that debate,” Jefferies analyst said in a research note.

Aarup-Andersen will be tasked with boosting profitability at the company, one of the world’s largest employers, at a time where the fallout from the coronavirus is still uncertain and its airport, hotel and catering services were hard hit by the lockdown.

However, ISS said earlier this month that it saw new opportunities arising amid higher demand for disinfection and deep cleaning, as well as advice on how to maintain social distancing in the workplace.

Aarup-Andersen was the top pick to take over the helm of Danske Bank after the former CEO was ousted in the midst of an alleged money laundering scandal at the bank’s Estonian unit. But, he was rejected by the financial regulator on the grounds that his banking experience was not sufficient. (Reporting by Stine Jacobsen, editing by Louise Heavens and Emelia Sithole-Matarise)