Manitowoc Co.’s board of directors has approved a plan to pursue a separation of the company’s Cranes and Foodservice businesses into two independent, publicly traded companies. Manitowoc anticipates effecting the separation through a tax-free spinoff of the Foodservice business and expects the transaction to be completed in the first quarter of 2016, creating two separate companies with distinct enterprise strategies.
“Manitowoc’s management team and our board of directors regularly evaluate and explore opportunities to optimize the company’s performance and create value for shareholders,” said Glen Tellock, chairman and CEO. “Manitowoc has taken and continues to take actions to enhance returns, including margin expansion initiatives, re-investment in our businesses, and utilization 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.”
Tellock added that Manitowoc has worked to build two strong sustainable business platforms, positioned for 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 realize their full potential on a standalone basis.”
Such a move had been expected since activist investors Carl Icahn and Relational Investors had acquired stakes in the company and began pushing for such a move.
The company determined the separation would position each business to pursue individual strategies as market conditions improve, and enable each business to attract a long-term investor base appropriate for the particular operational and financial characteristics of each entity. It will also enable investors to value each company separately and enhance the flexibility of each business to pursue distinct capital structures and capital allocation strategies to meet the individual needs of each business.
The Cranes business, which posted annual revenue of $2.3 billion in 2014, provides lattice-boom cranes, tower cranes, mobile telescopic cranes and boom trucks and includes brands such as Manitowoc, Grove, National Crane, Potain, Shuttlelift and Crane Care.
Goldman, Sachs & Co. is serving as financial advisor to the company.