Sweden’s SKF plans automotive spin-off after pressure from activist investor Cevian

SKF, the world’s largest manufacturer of bearings, is planning to break itself up after coming under pressure from Cevian Capital, Europe’s biggest activist investor. The Swedish group said on Tuesday that it would spin off its less profitable automotive business and keep its higher-margin industrial unit, sending its shares up by as much as 10 per cent. “Both businesses are global leaders in their respective fields and will through a clearer focus increase customer value and leverage on their strategies as standalone companies,” said Hans Stråberg, SKF’s chair.

SKF joins a growing trend of industrial companies seeking disposals to become more focused after conglomerates such as General Electric and Maersk have slimmed down in recent years. Much of the impetus for such break-ups has come from activist investors such as Sweden’s Cevian, which have pushed for change at industrial companies from Thyssenkrupp in Germany and Cookson in the UK to ABB in Switzerland and Volvo Group.

“This is a significant step towards unlocking SKF’s full value potential,” said Christer Gardell, founding partner of Cevian, which is SKF’s second-largest shareholder with an 8 per cent stake. He added that both the spun-off automotive business and the remaining industrial unit should be able to increase profitability markedly, leading SKF’s valuation as a proportion of profits to double. Cevian pointed to data showing that despite having a similar operating margin to Swedish industrial peers such as Assa Abloy, Alfa-Laval, ABB, and Trelleborg, SKF’s shares currently traded on a multiple under half of those companies. The spin-off represents the biggest move by Rickard Gustafson, SKF’s chief executive since 2021, to boost its share price, which has essentially stagnated for more than the past decade.