* Deal value includes taxes worth $220 mln
* Expects sale to close in first quarter 2014
* SPX expects to record gain of $6.50/share in first quarter
Dec 4 SPX Corp, which has been under
pressure from its largest shareholder to boost its stock price,
said it would sell its entire stake in an electrical equipment
joint venture to partner Emerson Electric Co for $571
SPX has been buying and selling businesses to focus on its
flow technology division, joining other diversified U.S.
industrials that have slimmed down their businesses after the
economic crisis of 2008-2010.
Ingersoll-Rand Plc has spun off its security
business, while Timken Co is hiving off its steel
Activist fund Relational Investors, which has a 15.5 percent
stake in SPX, urged the company in February to consider
strategic alternatives to boost its stock price.
"I can't say that (the sale of SPX's stake in the joint
venture) is entirely a function of Relational's involvement but
one would believe that their advise has been followed," Wedbush
Securities Inc analyst David Rose said.
Relational also opposed SPX's $4.2 billion offer for rival
Gardner Denver Inc last year, saying the bid would endanger the
company's stated goal of paring down to focus on flow
Private equity firm KKR & Co LP eventually took the
industrial machinery maker private.
SPX has been investing in its flow technology business due
to high demand for engineered pumps, valves, mixers and
filtration technologies that are used to generate power and to
process oil and gas.
The business had sales of $2.68 billion in 2012, just over
half of the company's total revenue.
SPX, which also makes equipment to produce food and
beverages, transformers and cooling towers for power plants,
said on Wednesday it expects the sale of its 44.5 percent stake
in EGS Electric to close in the first quarter of 2014.
The company said the deal value includes taxes worth about
$220 million. The company expects to record an after-tax gain of
about $300 million, or $6.50 per share, in its first quarter
ending March 30.
SPX said it would use a part of the proceeds to buy back
shares and to reduce its debt.
The joint venture, EGS Electric Group LLC, was set up in
1997, with Emerson responsible for operational management.
EGS Electric, which makes electrical fittings, hazardous
location lighting and power conditioning equipment, had revenue
of more than $500 million in 2013. It operates primarily in the
United States, Brazil, Canada and France.
St. Louis-based Emerson said sales from EGS Electric would
be consolidated in its industrial automation segment and would
add to earnings in 2014.
Shares in SPX, which has a market value of about $4 billion,
rose as much as 2 percent in morning trading but gave back
almost all those gains and ended only slightly higher on the
day. The stock has risen 18 percent since Relational disclosed
an 8.8 percent stake on Feb. 25.
Barclays was the financial adviser to Emerson on the