It was announced a little over a week ago that Manitowoc Company Inc (NYSE:MTW) would split into two core businesses, thanks in part to pressure from activist investor Carl Icahn and his hedge fund Icahn Capital LP, which owns 10.58 million shares of Manitowoc, 7.81% of all common shares. Now, it’s been revealed in a filing with the SEC this morning that Icahn has pulled off several other coups leading up to and following the split of the new company.
Carl Icahn is a world-renowned activist investor, who has been managing his New York-based hedge fund Icahn Capital LP since 1985. Icahn has amassed a personal fortune through his investing of over $26 billion, which unsurprisingly has led many investors to try and emulate his moves, a strategy we also advocate given his strong track record. With an equity portfolio of just over $33 billion as of September 30, Icahn holds major positions in Apple Inc. (NASDAQ:AAPL), CVR Energy, Inc. (NYSE:CVI), and eBay Inc (NASDAQ:EBAY), among other companies.
We reported on Icahn first taking his position in Manitowoc Company Inc (NYSE:MTW) back in December, and it wasn’t long before the pressure he exerted on the company alongside Ralph V. Whitworth’s Relational Investors caused them to announce a split of their crane and food service divisions into separate businesses.
Investors did not immediately react positively, and there was even some mild reproach for Icahn from journalists, including Moneybeat’s Maureen Farrell, who declared that his tried-and true tactics of pushing for splits of struggling companies was not always a cure-all for underlying problems in those businesses, and that investors were wise to that in this case. Among other recent moves, Icahn successfully pushed eBay Inc (NASDAQ:EBAY) to spin off its PayPal division, and has pushed for seats on the board of Gannett Co., Inc. (NYSE:GCI) after that company pre-empted his anticipated push to split them, and announced it themselves. However Manitowoc Company Inc (NYSE:MTW) has made big gains since its dip immediately following the announced split, up 11.39% since its January 30 close.
In the most recent filing and agreement between Icahn and Manitowoc Company Inc (NYSE:MTW), it’s been revealed that Icahn has managed to score several concessions from the company leading into the split, and then after the split takes place. In addition to landing one of their representatives on the current company’s Board of Directors, they will also have a representative appointed to the new company’s board once the spin-off is completed.
In addition, that new company, which will be the food services side of their current business (currently being referred to as “SpinCo”), will have a de-staggered board, and will have provisions in place to allow for shareholders with 10% stakes to call special shareholder meetings, as well as allowing shareholders to remove and replace directors at a special meeting should anyone obtain majority control of the company.
How a potential sale or takeover of “SpinCo” would be conducted is also covered by the new agreement. In the case of the former, the board must allow a rejected bidder the right to conduct diligence and counter with a better offer than a secondary bidder. In the case of the latter, any poison pill which is not ratified by stockholders within 135 days will expire, and such pills will not have a trigger below 20%.
Icahn Capital praised Manitowoc Company Inc (NYSE:MTW) for setting in place similar corporate governance as what it affected at eBay, saying shareholders would benefit from having control over the company they own, as well as benefit from the presence of Icahn on the board to continue to work to maximize shareholder value.
In addition to Icahn Capital and Relational Investors, other major hedge funds we track at Insider Monkey that have benefited from the announced Manitowoc Company Inc (NYSE:MTW) split include James Dinan’s York Capital Management with 6.50 million shares, Ken Griffin’s Citadel Investment Group with 990,950 shares, and Joe Dimenna’s Zweig Dimenna Partners, with 458,343 shares.
Disclosure: None
