Carl Icahn acquires stake in Manitowoc, calls for a breakup
Carl Icahn has amassed a 7.77% stake in Manitowoc, an investment meant to give the activist investor leverage to discuss the possibility of separating the company’s crane and foodservice segments into two separate companies.
Calling the shares “undervalued,” Icahn said he would discuss such possible moves with Manitowoc’s (MTW) management and board of directors and could also seek board representation “if appropriate.” Icahn has acquired 10.5 million shares at a cost of about $146.6 million, according to a filing with the Securities and Exchange Commission.
A Manitowoc representative wasn’t immediately available to comment on Icahn’s investment.
Manitowoc generates nearly two-thirds of its revenue from the sale of cranes but operating earnings are greater for the foodservice industry. This year, the company is projecting foodservice revenue to rise in the low- to mid-single-digits while cranes revenue is projected to decline. Crane’s sales have been hurt recently by some weakness in the North America and Latin America markets.
Due to the weakness for the cranes segment, overall revenue for the first nine months of the year slipped 3.2% to $2.85 billion.
The poor performance for the cranes business has hurt Manitowoc’s stock performance so far this year. Shares are down about 11% in 2014, while the Dow Jones Industrial Average has risen by nearly 10%. The stock, which is rising in premarket trading on the Icahn news, has outperformed that index over a five-year period.
Icahn’s stake makes him the third largest investor in Manitowoc, trailing stakes by Fidelity Management and Research and Relational Investors.