Carl C Icahn's team controls 7.81% of Manitowoc stock

The board of Manitowoc Co Inc on 29 January authorised separating its cranes and foodservice businesses and on 27 January approved a by-law amendment eventually eliminating its classified structure for board membership.

Manitowoc anticipates handling the separation of the segments through a tax-free spin-off of the foodservice business, probably during the first quarter of 2016. Thereafter, each business will be an independent, publicly traded company.

Manitowoc acted in the face of tough business conditions and increased pressure from activist investors, specifically Carl C Icahn's team in New York with 7.81% of Manitowoc common shares and Ralph V Whitworth's Relational Investors LLC of San Diego with 8.15%.

"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," says Glen E Tellock, chairman and chief executive officer. "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."

The cranes business reported 2014 sales of USD2.3 billion, down from the 2013 result of USD2.5 billion. The lifting equipment line includes lattice-boom cranes, tower cranes, mobile telescopic cranes and boom trucks. Brands include Manitowoc, Grove, National Crane, Potain, Shuttlelift and Crane Care.

In discussing the crane segment results, Tellock notes, "Uncertainty among our customers remains at the forefront of their purchasing decisions. Ongoing global softness in the rough-terrain and boom truck markets, coupled with declining oil prices, created a challenging environment for the segment. However, we continue to focus on the areas within our control, such as cost optimisation strategies."

Tellock believes worldwide crane demand levels "will remain very challenging in the near-term, but we are encouraged by our improved order intake, a strengthening backlog and the strong market acceptance of our VPC crawler crane technology". VPC is proprietary variable position counterweight technology that Manitowoc offers on its MLC300 and MLC650 lattice-boom crawler cranes, introduced in early 2014.