Ralph Whitworth’s Relational Investors LLC disclosed a stake in SPX Corp. (SPW:US), adding another investment in an industrial company, and urged it to sell assets and hone its acquisition strategy.
Relational reported an 8.76 percent stake in Charlotte, North Carolina-based SPX, according to a filing today, making it the second-largest shareholder (SPX:US) behind BlackRock Inc.
“Despite the company’s attractive business mix, total shareholder returns and profitability have lagged peers’ due primarily to excessive prices paid for acquisitions,” Relational said.
Since January 2012, Relational has taken a stake in Timken Co. (TKR:US) to urge the bearings maker to spin off its steel unit and used shareholdings in Illinois Tool Works Inc. (ITW:US) to push for change.
SPX rose (SPW:US) 2 percent to $81.76 at 12:49 p.m. in New York. The stock had advanced 14 percent this year through Feb. 22 compared with a 6.3 percent gain for the Standard & Poor’s 500 Index.
SPX, which produces industrial equipment for a variety of industries, ended talks in December to by rival Gardner Denver Inc. after shareholders balked at the deal. Relational said today that SPX should abandon its “growth-at-any-cost strategy,” boost profit margins to the level of peers and link executive pay more to value creation.
If it fails to achieve this, “the company should explore strategic alternatives for better achieving the long-term intrinsic value of the assets,” Relational said in the filing.
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