ABB Group Selling Its Power Grid Unit Under Shareholder Pressure

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Arconic is considering a sale, Reuters reported Friday. The aluminum products maker, which was targeted by Elliott Management last year, is reviewing offers from a number of private equity firms including Apollo Global Management, duo Blackstone Group and Carlyle Group, and a consortium made up of KKR and Onex.

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Q2 hedge fund letters, conference, scoops etc

The move, which Elliott reportedly supports, comes less than one month after the company announced plans to sell its Building and Construction Systems (BCS) business as part of a strategic review.

Meanwhile, Swiss engineering group ABB Group is considering the sale of its power grid unit amid shareholder pressure. Activist investors Cevian Capital and Artisan Partners are pushing the firm to simplify its operations, contending ABB Group is too big and complicated.

The power grid division has increased to about $10.2 billion following productivity and margin gains, Bloomberg reported Thursday, prompting the company to consider a sale of the unit.

What we'll be watching for this week

  • Will the House of Representatives schedule a debate on a bill that further limits when shareholders can resubmit proposals?
  • Will LaSalle Hotel Properties abandon its deal with Blackstone Group now that it opened talks with hostile bidder Pebblebrook Hotel Trust?
  • Will ThyssenKrupp name Siemens executive Siegfried Russwurm as its new chairman?

Activist shorts update

Tesla CEO Elon Musk decided to keep his company public after two weeks of speculation following a rash tweet.

Earlier this month, Musk said on Twitter he had secured funding to take Tesla private at $420 per share, prompting a reported Securities and Exchange Commission investigation into the meaning of “funding secured.” The announcement also sparked shareholder uproar, with investors like ARK Investment Management arguing that the firm should remain public.

“Given the feedback I've received, it's apparent that most of Tesla's existing shareholders believe we are better off as a public company,” Musk wrote in a blog post. “The majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don't do this.’”

Since announcing his going-private plan, Musk has seen Tesla’s share price drop as much as 19%. In the process, short sellers made $1.1 billion.

“Shorts like Tesla have been difficult to hold on to,” Odey Asset Management wrote in a recent shareholder letter. “However, Tesla feels like it is entering the final stage of its life.”

To arrange an online demonstration of Activist Insight Shorts, email us or view our product brochure to find out more.

Chart of the week

The proportion of Republic of Korea-headquartered companies publicly subjected to activist demands, targeted by Elliott Management (between January 1 and August 28 2018).

Elliott COTW

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