Pressure continues to split ABB
Cevian Capital, an activist hedge fund and the second largest shareholder of ABB, continues to push for a split of the engineering giant, according to Swedish media.
In autumn last year, the ABB Board of Directors started a strategic review of whether the Power Grids division should be retained or sold.
However, Cevian has now clearly indicated that it wants to see a spin-off and stick to its split plan, reports di.se.
“The overall structure is too complex. Therefore, Cevian would like to see a spin-off of the Power Grids into an independently listed company. This would free up and create a significant value for ABB,” says a source who is close to Cevian Capital and has insight into how the activist fund views on the issue.
However, ABB’s CEO Spiesshofer, is of a different view and believes the split would not answer questions about the future of the Power Grids, which in the second quarter accounted for about a third of ABB’s total sales.
“Cevian never liked the conglomerate model. It is a complicated and outdated way of conducting business. The cleaner the structure, the better it will be. Then the board and the management can focus on the tasks, rather than to running around and getting involved with all sorts of things” said the source cited by di.se.
Among the analysts who follow ABB, many people no longer call for a spin-off because of the better results the Power Grids unit has had recently.
“The business could go even better. When you merge companies, they consume energy. When you release units, then the energy is released as well. It’s a better way to run business,” says the source.