SPX Reaches Accord With Relational Over Board Seats

The SPX Corporation, an industrial equipment maker, said on Tuesday that it had struck an agreement with the activist investment fund Relational Investors that could give Relational up to two board seats over the next two years.

Under the terms of the agreement, SPX will give Relational the option of naming David H. Batchelder, one of the fund’s co-founders, to the company’s board after its annual meeting this year.

Should Mr. Batchelder take advantage of that option, his firm would then have the ability to request the chance to nominate a second director for the 2015 annual meeting. If the company declines, Relational would then be able to take the matter directly to its fellow investors.

The agreement brokers a peace between the company and Relational, which has agitated for change at SPX for more than a year. The activist firm first began buying shares in late 2012, unhappy that SPX had considered buying a larger peer, Gardner Denver, for more than $4 billion.

Since then, Mr. Batchelder and his firm have pressed the company into focusing on its core operations, including by renewing an emphasis on its pumps business, to help improve its profit margins and stock value. Relational also pushed for a slowdown in takeovers and a more disciplined capital spending plan.

The investment fund has continued to build on its stock position, which now stands at about 15.5 percent.

“SPX and Relational have engaged in a series of productive discussions about our business, capital allocation and long-term prospects,” Christopher J. Kearney, SPX’s chairman and chief executive, said in a statement. “We have always embraced an open dialogue with and input from our shareholders and are pleased to have reached this agreement with Relational.”

Mr. Batchelder added: “We are pleased to have reached this agreement with SPX and are encouraged by the progress the company made in 2013.”

Relational could gain up to two seats on SPX’s board, but the firm may not exercise those rights, a person briefed on the firm’s deliberations said. The investment fund held the right to seek a board seat at Illinois Tool Works, but thus far hasn’t taken advantage of it.

Shares in SPX have risen more than 45 percent over the past year. They reached $101.73 by the end of trading on Tuesday, before news of the accord with Relational was announced.