Peltz Gains Board Seat, Pushes for Breakup at Ingersoll Rand

This author wonders what activists will do once the market’s conglomerates have all been broken up. Nelson Peltz of Trian Group gaining a board seat at Ingersoll Rand may be the latest harbinger of yet another spinoff on the horizon. Peltz had been trying to get a board seat and push for change but the company up to this point had only offered him a seat with strings attached, like forgoing the right to call a special shareholder’s meeting. Now that the company has relented and given him a seat free of onerous restrictions, what might be in store for Ingersoll Rand? An excerpt from the 13D tells all:

During the discussions and at the Board meeting, the Trian Group communicated its views regarding the Issuer’s current business and strategies, Trian’s ideas on ways that the Issuer could enhance shareholder value by improving certain key financial, operational, compensation and corporate governance metrics and by implementing various strategic alternatives, including a restructuring or separation of its key business segments into three standalone public companies. The Trian Group also communicated its views to the Issuer on various initiatives which the Trian Group believes would enhance shareholder value, such as increasing operating margins to levels comparable to those achieved in peer businesses, considering the use of prudent amounts of leverage to return capital to shareholders by increasing the size of the Issuer’s stock repurchase program and through special dividends, taking additional steps to strengthen the Issuer’s management team and better align management compensation with the Issuer’s performance in order to enhance shareholder value…

The company currently organizes itself along four business segments – Climate Solutions (large-scale heating and air conditioning), Residential Solutions (consumer climate, plus home security), Industrial Technologies (pumps and flow systems, and, oddly, golf carts), and Security Technologies (more locks, biometric security, and timecard systems). While we do not know exactly what Peltz has in mind, there do seem to be some opportunities to reorganize the business segments along key competencies. Stock Spinoffs will be on top of this situation as it unfolds.

Disclosure: Author has no position in stocks mentioned.

13D from Trian

8-K Reporting Nelson Peltz’s Appointment