The Manitowoc Company’s board of directors has approved a plan to pursue a separation of the company's Cranes and Foodservice businesses into two independent, publicly traded companies. The company currently anticipates effecting the separation through a tax-free spin-off of the Foodservice business and expects the spin-off to be completed in the first quarter of 2016, creating two separate, companies with distinct enterprise strategies.
“Manitowoc’s management team and our board of directors regularly evaluate and explore opportunities to optimize the company’s performance and create value for shareholders,” commented Glen E. Tellock, chairman and CEO of the company. “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. 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, which reported annual revenue of $2.3 billion in the 12-month period ended Dec. 31, 2014, provides lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes and boom trucks. The business holds leading market positions and brands, including Manitowoc, Grove, National Crane, Potain, Shuttlelift and Crane Care brand names. The business operates 37 facilities in 18 countries and generates nearly 60 percent of its revenue from non-U.S. markets.
The Foodservice business, which reported annual revenue of $1.6 billion in the twelve-month period ended Dec. 31, 2014, is a manufacturer of commercial foodservice equipment serving the ice, beverage, refrigeration, food prep and cooking needs of restaurants, convenience stores, hotels, hospitals, and other institutions. The business has a worldwide network of 120 distributors serving dozens of well-recognized restaurant chains. The business promotes more than 24 brands, including Manitowoc, Garland, Convotherm, Cleveland, Lincoln, Merrychef, Frymaster, Delfield, Kolpak, Kysor Panel, Servend, Multiplex, KitchenCare, Inducs, Koolaire and Manitowoc Beverage System, and has a global presence that spans five continents and more than 80 countries.
The company determined to pursue the separation of the two businesses in order to:
- Position each business to pursue individual strategies as market conditions improve;
- Enable each business to attract a long-term investor base appropriate for the particular operational and financial characteristics of each entity;
- Enable investors to value each company separately; and
- Enhance the flexibility of each business to pursue distinct capital structures and capital allocation strategies to meet the individual needs of each business.
Manitowoc expects to continue to execute its stated strategy and capital allocation plans as management works through the execution of the separation, resulting in further deleveraging from now until completion of the transaction. As a result, Manitowoc expects each independent company to have a capital structure and credit rating consistent with that of Manitowoc today.
Additional information on structure, management, governance and other significant matters will be provided at a later date. The proposed separation is subject to customary conditions, including receipt of legal opinions concerning the tax-free nature of the transaction, effectiveness of appropriate filings with the Securities and Exchange Commission, and final approval by the Company's Board of Directors.
The company notes that there can be no assurance that a separation will ultimately occur or, if one does occur, as to its terms or timing. Any transaction of this type is dependent on numerous factors that include the macroeconomic environment, credit markets, and equity markets.
Goldman, Sachs & Co. is serving as financial adviser and Foley & Lardner LLP and Skadden, Arps, Slate, Meagher & Flom LLP are serving as legal advisers to the company.