Speculation that Manitowoc could eventually split its crane and foodservices divisions into separate businesses has intensified after legendary investor Carl Icahn increased his stake in the firm and revealed he would back a break-up.
SEC filings show that Icahn recently acquired 10.5 million shares at a cost of almost $147m (£97m), taking his stake to 7.77% and making him the third largest shareholder in the business.
Reports suggest the investment is designed to give the investor leverage to discuss the possibility of separating the crane and foodservice segments into independent companies after he called Manitowoc’s shares “undervalued”.
While Manitowoc relies on crane sales for more than 60% of its $4 billion (£2.6 billion) turnover, operating earnings from selling catering equipment are far greater. The company’s foodservice equipment business accounted for 38% of revenues in its last full fiscal year, but delivered 53% of operating earnings.
While foodservice operating margins lie in the 15% range, they stand at around just 7% for cranes. Sales projections for the foodservice business have also been higher in recent quarters.
Icahn’s reported preference for seeing the business separated into two comes six months after one of its largest shareholders, Relational Investors, called for a break-up.
Manitowoc has not commented on the prospect of such a move following news of Icahn’s investment, but a ‘senior management succession plan’ announced today will do little to quell the speculation.
This morning the company said that the president of its cranes division for the past eight years will move to a new company-wide senior VP business development role, while a new senior VP of global operational excellence has been appointed ahead of the impending retirement of the incumbent vice-president.