It only took a month for Carl Icahn’s latest activist move to pay big dividends, as Manitowoc Company Inc (NYSE:MTW) announced in an 8-K filing with the SEC on Thursday that it would split its business into two following pressure from two activist hedge fund shareholders: Icahn’s Icahn Capital LP, and Ralph V. Whitworth’s Relational Investors. Icahn owns 10.58 million shares of Manitowoc, 7.81% of all common shares, while Relational owns 11.05 million shares, 8.15% of all common shares.
As we reported at the end of last month, Icahn had just announced his new activist position in Manitowoc Company Inc (NYSE:MTW), and expressed his intentions to push the company to split its crane and foodservice divisions into separate businesses, unlocking shareholder value. It’s a position that had already been taken by Relational, which acquired their activist stake in the Wisconsis-based manufacturer in June, 2014, and expressed the belief that their divisions were synergistically opposed, which was causing a perpetual discount in the company’s share price and market cap.
Manitowoc Company Inc (NYSE:MTW), with a current market cap of $2.61 billion, eventually agreed that splitting its assets into two separate companies would result in unlocking the full potential and value of each, and plans to complete the split by the first quarter of 2016. The company’s shares, which were down 10.3% year-to-date, are up nearly 4% in after-hours trading heading into Friday on the news.
The split is just the latest successful bit of activist investing for legendary investor Carl Icahn, whose mere ownership presence in companies now often heralds a rise in the stock’s price, as investors value Icahn’s track record of success at exerting pressure on companies to reform their businesses to the benefit of shareholders.
Some of Icahn’s recent moves have included successfully pushing Family Dollar Stores Inc. (NYSE:FDO) to sell itself after taking an activist position in that company, which they eventually did to Dollar Tree, Inc. (NASDAQ:DLTR); successfully pushing eBay Inc (NASDAQ:EBAY) to spin off its PayPal division; and successfully nominating three directors to the board of Hertz Global Holdings Inc. (NYSE:HTZ), as well as pushing for seats on the board of Gannett Co., Inc. (NYSE:GCI) after that company agreed to split just ahead of his taking an activist position.
Relational has been no slouch in their own activist endeavors. In addition to their current success with Manitowoc Company Inc (NYSE:MTW), Whitworth was deemed instrumental in helping Hewlett-Packard Company (NYSE:HPQ) right itself while a member of that company’s board, following a series of scandals and mismanagement; he was nominated in November of 2011, and became interim chair of the board in April, 2013. HP remains the largest holding in Relational’s equity portfolio, and is up over 30% since Whitworth was appointed to the board.
Whitworth is also famed for orchestrating a major shakeup at Home Depot Inc. (NYSE:HD) in 2007 while an activist investor in that company, which resulted in the CEO and four of the board’s directors being ousted. He also helped improve Home Depot’s business model by lobbying for a retreat from the commercial-building supply side of their business. Home Depot is up nearly 300% since the beginning of 2008. Whitworth has also served on the board’s of 11 other publicly-traded companies, including Mattel, Inc. (NASDAQ:MAT) and Sirius XM Holdings Inc. (NASDAQ:SIRI).
It’s also worth nothing that while Manitowoc Company Inc (NYSE:MTW) has had a disastrous run of late, tumbling over 40% since July on weakness in its crane division, investing in spinoffs has historically been a profitable endeavor, as the new businesses are typically stronger and more focused on their own, while becoming more attractive pure play investment options to investors.
Other major hedge funds we track here at Insider Monkey that stand to benefit from Manitowoc Company Inc (NYSE:MTW)’s 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
