The company operates under two business segments, foodservice and cranes, with cranes being the larger unit at $2.5b in sales in 2013 or ~63% of the company’s total sales. The foodservice segment, maker of items such as ice machines and deep fryers, generated ~$1.5b in sales in 2013 and commands higher margins than the crane business. Additionally, peers in the industry command higher public multiples so Relational feels that Manitowoc is being undervalued on a sum of the parts basis. Adding further fuel to the fire is the fact that Relational doesn’t believe there are any synergies between the two very different segments.
The company acknowledged receiving the 13D filing and CEO & Chairman Glen Tellock said that the company maintains an ‘open dialogue with all’ of its shareholders, including ‘several conversations’ with Relational. Mr. Tellock also added that:
We have great confidence in the strength of our business and our ability to manage the company in any market environment. The Board of Directors and management team remain committed to building value for all shareholders through the continued execution of our strategy, including margin expansion initiatives which are already delivering results, and the continued evaluation of our capital allocation policy following our substantial deleveraging since the Enodis transaction
Investors were clearly excited about Ralph Whitworth’s involvement sending the company’s shares up over 10%. Not a surprising reaction given the firm’s recent track record of success. It will be interesting to see if the company chooses to give in or fight back. I imagine that right now management is sizing up how the large, institutional shareholders are feeling. We will keep you updated.
Disclosure: Author holds no position in any stock mentioned.