Ingersoll Said to Plan Spinoff and Other Strategic Moves
The conglomerate Ingersoll-Rand plans to announce a number of measures aimed in part at appeasing the activist investor Nelson Peltz, including a spinoff of its security business, people briefed on the matter said Sunday night.
The company plans to combine its home and commercial security operations, which have combined revenue of about $ 2 billion, and spin off the new entity in about 12 months, these people said. Ingersoll reported about $ 14 billion in revenue for the year ended Sept. 30.
It also plans to announce a $ 2 billion stock buyback and a roughly 30 percent increase in its dividend, to about 21 cents a share.
Ingersoll’s board met at the company’s headquarters in Dublin last week to approve the initiatives, one of the people briefed on the matter said. The company could announce the moves as soon as Monday. Spokeswomen for Ingersoll and Mr. Peltz’s investment fund, Trian Fund Management, were not immediately available for comment.
The moves follow a monthslong review of Ingersoll’s businesses after agitation by Mr. Peltz, who has shaken up companies including Heinz and Cadbury Schweppes. Among his most recent targets are Lazard and the State Street Corporation.
To Mr. Peltz and others, Ingersoll has seemed a tempting target for a corporate breakup for some time. The company makes products as diverse as Kryptonite locks and Club Car golf carts, and its earnings had been under pressure for years given the depressed markets for residential and commercial construction.
Trian announced in May that it had acquired a stake of about 7 percent in Ingersoll. After more than a month of negotiations, including the company dropping conditions that limited Mr. Peltz’s ability to call a special meeting of shareholders, Ingersoll offered him a seat on the board.
But with the company’s shares having risen about 60 percent this year — they closed on Friday at $ 48.69 — Ingersoll executives felt less pressure to pursue a full-scale breakup of the company, one of the people briefed on the matter said.
The new plan has Mr. Peltz’s backing, these people said.
The conglomerate is no stranger to stirring up its operations through transactions. It has sold four units over the past two years, according to Standard & Poor’s Capital IQ. Among those deals was selling a majority stake in Hussman, a refrigerated display business, to the investment firm Clayton Dubilier & Rice last year for about $ 200 million.
News of the company’s plans was first reported by CNBC.