Dick Barfield, chief investment manager of Standard Life, Hanson's second biggest shareholder with a 2.1 per cent stake, commented: "It's not clear to us that the sum of the parts will be greater than the whole."
Like most institutions, Standard Life has become increasingly concerned about where Hanson's future earnings growth will come from.
"We're still not sure what the answer is," Mr Barfield said. "It [the breakup] is a brave thing to do. But it's not clear that these four companies are going to perform any better individually."
Hanson stunned the stock market last week with its plans to demerge its energy, chemicals and tobacco divisions as separately quoted companies, leaving a rump Hanson consisting of the building materials and equipment businesses.
A 3.6 per cent decline in the Hanson share price in the three days since the announcement suggests investors are far from convinced that the breakup makes any sense.
Another institutional investor, Leslie Robb, managing director of Scottish Widows Investment Management, said: "I see Hanson as a company that's lost its way and had nowhere to go. It's a collection of dull businesses and I see no real value in the shares, even on a demerged basis." Scottish Widows holds 0.7 per cent of Hanson.
Another leading fund manager said: "I think the market is right to be cynical. Given the dividend and cash-flow worries, the loss of the central treasury and lack of growth, the sum of the parts will be worth less than the whole."
But it has become apparent that the company was under enormous pressure to do something to halt its share price underperformance. One fund manager said: "Virtually every institution has put to Hanson their views that this could not go on. We have certainly talked to them."
While institutional investors view the breakup with indifference or outright suspicion, City advisers have been queuing for what promises to be a bonanza of fresh work for merchant banks, brokers, lawyers and auditors. Three of the four demerged businesses are likely to be in the FT-SE 100 index of blue-chip companies, each requiring its own advisers.
The chemicals business, with the bulk of its operations in America, is likely to choose a US adviser. Goldman Sachs, which advised on the spin- off of US Industries, and Morgan Stanley are thought to be the frontrunners.
N M Rothschild, which has advised Hanson for 30 years, hopes to continue working for the rump company. The energy business is likely to go to a bank that does not already advise a regional electricity company. That rules out both Rothschild and Schroders.
Hanson is not expected to announce more details of the breakup for some time. It now needs to get clearances from the American and British tax authorities and decide on how the group debt should be allocated among the four "Sons-of-Hanson".
Chris Collins, Hanson's vice-chairman, defended the breakup, saying the benefits would show through in the long term. Bids for any of the businesses from a trade buyer would be seriously considered, he said.
He conceded that the demerged companies might pay "marginally more" tax, but insisted the one-off costs of demerger were "containable".
Small investors would be offered special dealing arrangements at reduced cost if they wanted to sell their shares in the demerged companies, he said.
The Hanson camp argues that the demerger gives each company management greater freedom and more access to capital, and investors will be able to pick and choose which parts of the old Hanson empire to stick with.
What the brokers say
SBC Warburg Sell
Merrill Lynch Neutral/
James Capel Neutral
Charles Stanley Buy
Break-up value range: 137p-224pReuse content