Icahn Picks Up The Fight Against Manitowoc

In the middle of 2014, Relational Investors was busy notching another activist victory, this time at Timken (TKR), while also building up the case on its newest target, The Manitowoc Company (MTW). In short, the firm argued that a foodservice business selling machinery to restaurants didn’t have any reason to be paired with a crane equipment business. As a result, Relational believed the company was being undervalued on a sum of the parts basis and it seemed the market agreed as the stock popped on the announcement. Unfortunately, Ralph Whitworth, Relational’s CEO, fell ill and the WSJ reported that it would be unwinding most of its investments. That also meant it was unlikely for any activist campaigns, such as the nascent one at Manitowoc, to be continued.

After months of quiet and underperformance at the company though, a new, and quite louder, activist has picked up the baton from Relational. Carl Icahn acquired a 7.77% stake in the company and his filing states that he is looking to break up the company along the same lines. The filing also notes that Mr. Icahn has yet to have any discussions with management or the board, an interesting contrast to the unveiling of Relational’s stake. In that case, management released a statement and noted that they had engaged in ‘several conversations’ with Relational. Could this be the beginning of an acrimonious relationship?

Manitowoc’s shares jumped again on the activist news, but still remain well below the initial Relational ‘pop’. The WSJ notes that Mr. Icahn (or any activist) faces numerous challenges in taking on Manitowoc. The company’s CEO, Glen Tellock, only recently (well, relatively recently) acquired the foodservice business (2008), paying a hefty price based on the idea of adding a stable platform to fall back upon when the heavily cyclical construction business enters one of its inevitable down periods. Apparently, the company does not think the crane business could survive as a standalone entity. Additionally, the company has a staggered board limiting an overhaul and a poison pill shareholder rights plan limiting individual ownership. Forming a consortium with Relational (8.16%) and York Capital (6.63%), another event driven fund, would make Mr. Icahn a rather formidable foe though. This should be an interesting one to watch in the new year.

On that note, we want to wish all of our readers a Happy New Year and may it be one filled with health and much success!

Disclosure: Author holds no position in any stock mentioned.