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SPX rallies after Relational reports stake, says shares undervalued

Relational Investors disclosed a new 8.76% stake in SPX Corp. (SPW) and detailed reasons it believes the company's shares are "significantly undervalued." Relational believes that the significant drop in the company’s stock price that occurred in December of 2012 reflects the market's "lack of confidence in the board and management's ability to properly discipline capital allocation and assess acquisition opportunities." Relational added that should SPX fail to achieve operating margins consistent with peers and gain the confidence of investors, it believes the company should explore strategic alternatives for better achieving the long-term intrinsic value of the assets. The activist investor warned that it may exercise all of their respective rights as shareholders in a manner consistent with their equity interests. Relational intends to discuss the company and its performance with members of SPX's board and management. Further, the group stated that it may in the future seek representation on the company’s board of directors. Shares of SPX Corp. responded favorably to Relational's stake and comments, up 3%, or $2.09, in early afternoon trading.