29.01.2015

Manitowoc to split

Manitowoc has announced that it plans to separate its Crane and Foodservice businesses into two independent, publicly-traded companies by 2016.

The move follows pressure from Carl Icahn after he acquired a 7.7 percent stake in the company in December, and from at least one other significant institutional shareholder. See Icahn pick on Manitowoc
The Cranes business reported revenues for 2014 of $2.3 billion, while the Food service business, posted revenues of $1.6 billion.

Chief executive Glen Tellock said: “Manitowoc’s management team and our board of directors regularly evaluate and explore opportunities to optimise the Company’s performance and create value for shareholders. Manitowoc has taken and continues to take actions to enhance returns, including margin expansion initiatives, re-investment in our businesses, and utilisation of our free cash flow to de-lever our balance sheet. We believe the separation of
Cranes and Foodservice will position these businesses to take advantage of anticipated long-term improvement in demand and other opportunities in their respective markets.”

“Over the past several years, we have transformed Manitowoc and worked to build two strong business platforms within one enterprise, and each business enjoys global leadership and is positioned for sustainable growth and value creation. After a comprehensive evaluation, including a thorough review of the current and projected operating environments for the two segments, we have determined that the Cranes and Foodservice businesses are best-suited to realise their full potential on a standalone basis.”

Vertikal Comment

Separating the two businesses has a logic to it, in that if you started from scratch you would never have put these two together. However having said that, they are together and have been since each was established. And at one point the food division – or ice machine business as it then was - helped save the company. The main downside however is the distraction, cost and uncertainty during the separation process.

It is not as though the group carries a massive corporate overhead or that is does not understand one of the businesses. Having said all that if it is done well we mayall look back in a few years time and say "what a great decision this was".

Time will tell.