(Reuters) - Smiths Group Plc (L:SMIN) shares rose as much as 8 percent on Tuesday after a report said that U.S. activist investor ValueAct had taken a stake in the British engineering company.
ValueAct, a hedge fund led by Jeff Ubben, had taken a stake in Smiths but had not yet decided whether its stake would become one of its core positions, the Financial Times reported on Monday quoting sources.
However, a source close to the matter told Reuters that ValueAct had held a stake in Smiths for a while. The source did not specify when the stake was originally purchased and what ValueAct's current holding stood at.
ValueAct, which played a key role in shaking up Microsoft Corp 's (O:MSFT) management, tends to become one of the largest independent shareholders at each of its core investments and run campaigns to shake up the company while seeking board representation.
San Francisco-based ValueAct could not be reached for immediate comment outside of regular business hours.
The fund has not had to formally disclose its holding in Smiths, a maker of industrial seals, medical devices and security detectors, as its stake is below the 5 percent compulsory threshold set by the London Stock Exchange.
ValueAct recently said it had taken a 5.44 percent stake in engine maker Rolls-Royce Holdings Plc (L:RR), stepping up pressure on the company following a series of profit warnings.
Activist investors have been taken a keener interest in European stocks. Investors in UBS (VX:UBSG), John Menzies, Alliance Trust (LONDON:ATST) and DMG Mori Seiki have sought spin-offs or board changes in the recent months.
ValueAct views Smiths' medical devices unit and its John Crane seals unit as potential M&A targets, the FT said.
Smiths, who is set to welcome a new chief executive in September, has twice tried to sell its medical unit.
The company has been struggling with weak demand, a slump in demand from commodity customers and a cut in government spending. In response it has restructured to trim costs and streamline its operations.
As of Monday's close, Smiths was trading at about a 17 percent discount to what StarMine estimates as its intrinsic value, the level the stock should trade at based on its most likely growth trajectory over the next five years.