Manitowoc is spinning its foodservice and crane businesses into two independent, publicly-traded businesses, it has confirmed.
Details of the split follow weeks of speculation that the firm would break up the business in order to set the two divisions on a stronger financial path. Legendary investor Carl Icahn recently led the calls for a separation after increasing his investment in the firm and branding the shares ‘undervalued’.
The break-up was ratified by the company’s board of directors last week after what it terms a “comprehensive evaluation”.
They said the move would be completed in the first quarter of 2016, creating two separate companies with distinct enterprise strategies.
“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,” stated Glen Tellock, chairman and CEO of Manitowoc.
“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.”
Although the crane business has traditionally contributed the majority of Manitowoc’s sales, its US$1.6 billion (£1.06 billion) foodservice business delivers greater profits.
Manitowoc operates a worldwide network of 120 distributors serving dozens of well-recognszed restaurant chains.
It owns 24 catering equipment brands including Manitowoc, Garland, Convotherm, Cleveland, Lincoln, Merrychef, Frymaster, Delfield, Kolpak, Kysor Panel, Servend, Multiplex, KitchenCare, Inducs, Koolaire and Manitowoc Beverage System.
Tellock said that both the cranes and foodservice business were “best-suited to realise their full potential on a standalone basis.”
Manitowoc believes the separation will position each business to pursue individual strategies as market conditions improve and enable each one to attract a long-term investor base appropriate for the particular operational and financial characteristics of each entity.