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Activist investor Carl Icahn urges Manitowoc to split

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Activist investor Carl Icahn urges Manitowoc to split PART 1 OF 6

Carl Icahn discloses activist stake in Manitowoc

Icahn proposes splitting up Manitowoc

Carl Icahn is one of Wall Street’s most influential investors. A 13D filed with the SEC on December 29 said the activist investor had acquired a 7.77% stake in Manitowoc (MTW). Icahn plans to push Manitowoc to break itself up into two companies.

Carl Icahn discloses activist stake in Manitowoc

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Icahn isn’t first activist investor to demand a separation at Manitowoc. Relational Investors LLC also disclosed an 8.52% stake in June, pushing for spinoff of Manitowoc’s foodservice business.

Relational’s ability to pursue the breakup plan has been hampered by the health challenges of its co-founder Ralph Whitworth. Reports in October noted the fund’s plans to shut down and liquidate its current portfolio and relaunch in 2015 under new management.

MTW shares rose over 11% in premarket trading ahead of news of Icahn’s disclosure. MTW shares have tumbled ~40% since July. Shares had fallen about 11% in 2014, compared with a 10% rise in the Dow Jones Industrial Average.

Manitowoc

Manitowoc is a multi-industry capital goods manufacturer. It operates in two principal markets:

  1. Cranes and related products
  2. Foodservice equipment

Icahn and Manitowoc

According to Icahn, MTW shares are undervalued. The investor plans to pursue discussions with MTW’s management and the board to separate Manitowoc’s crane and foodservice segments into two separate companies. He would seek shareholder board representation “if appropriate”.

Icahn now owns 10.5 million shares of MTW worth $146.6 million. Icahn’s stake makes him the third largest investor in Manitowoc, after Fidelity Management and Research and Relational Investors.

Icahn’s recent successes

In January, Icahn started calling for eBay Inc. (EBAY) to split up and spin off its PayPal business. In late September, the company said it was the “right time to create two world class independent platforms.”

Icahn has been pushing Apple Inc. (AAPL) to increase the pace of its share buybacks since he took a stake in the summer of 2013. In April, Apple added $30 billion to its buyback program.

Family Dollar Stores (FDO) announced a sale shortly after Mr. Icahn revealed his stake in April. The publishing company Gannett Company (GCI) said it planned to separate its publishing and broadcast divisions after Icahn’s disclosure in Gannett.

In the upcoming parts of this series, we’ll discuss Manitowoc’s businesses and how the company is creating value for its shareholders.

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