ABB’s Activist Investor Cevian Ramps Up Pressure for Breakup

  • Cevian’s Christer Gardell says spin-off is only logical step
  • ABB to announce strategy on capital markets day Oct. 4

Three weeks away from delivering a strategy update to investors, ABB Ltd. is facing intensifying pressure from activist investor Cevian Capital to break itself up.

The Zurich-based company should spin off and list its unit making power-transmission equipment, Cevian said in a statement. The new structure would comprise so-called power and automation arms.

“Cevian has a clear view that the company could do a lot better if it was separated,” spokesman Edwin van der Geest said. “If there were an ABB Power and an ABB Automation that would reduce a lot of complexity and create lots of new energy.”

The comments will leave Chief Executive Officer Ulrich Spiesshofer in no doubt about the position of Cevian after recent media reports about the activist’s aims. Spiesshofer, entering his fourth year in charge, is putting the finishing touches to an investors’ day presentation scheduled for Oct. 4, when ABB will announce the findings of a one-year review.

Marking the first time the activist investor had publicly stated its stance, Cevian co-founder Christer Gardell commented in Swedish daily Svenska Dagbladet on Tuesday that power grids should be carved out and listed.

“Spinning off and listing Power Grids is the only rational and logical business decision,” Gardell told SvD. “The cost of a split would be totally overshadowed by the value created.”

The strategy to create value by separating disparate units is in keeping with Cevian’s influence at Finland’s Metso Oyj and Germany’s Bilfinger SE. Both companies split into parts and it has long been assumed that Gardell would advocate the same strategy for ABB.

Cevian has a 5 percent stake in ABB and would need support from other large shareholders to be able to push through its plans. Investor AB, the company’s largest shareholder, will wait for the findings of the review into the Power Grid division and see what the company proposes before making any decision, according to spokesman Stefan Stern.

A spokesman for ABB said that all options are being reviewed for the power grids unit, and the company has no further comment before the capital markets day.

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