STOCKHOLM ABB must come up with convincing reasons to keep the company's power grids division when it updates shareholders on the business next month, another of the group's largest investors said, adding to pressure on the group to break up.
Nordea, the 10th-biggest owner of ABB with a 0.6 percent stake in the Swiss industrial robot and power station maker, said it was unclear why ABB should remain as one company.
Activist investor Cevian has already called for ABB to spin off the Power Grids business, which makes components for off-shore windfarms and high voltage cables, and has previously been a drag on the overall performance of ABB.
Another big investor, Artisan Partners, has echoed that call.
"We see question marks around why ABB should remain as one unit, and we think the burden of proof lies on the company to show why it should remain," said John Hernander, portfolio manager at Nordea Asset Management.
Power Grids, which generated sales of $11.6 billion in 2015, has improved its profitability in recent quarters as it ditched risky projects, but remains ABB's least profitable division.
"While profitability has been better than expected lately, it is still not obvious that these units should be under the same roof," Hernander said.
"All options are being considered in our strategic review of the Power Grids business and, as we have previously said, we will give an update at our Capital Markets Day on Oct. 4," said ABB spokesman Saswato Das.
(Reporting by Johannes Hellstrom, writing by John Revill; Editing by Elaine Hardcastle)