The Manitowoc Company, a manufacturer in Wisconsin, plans to spit itself in two after pressure from powerful activist investors.
Manitowoc will separate its crane manufacturing business from its food service business, it said on Thursday, betting that the two will be stronger and more valuable as independent companies. It said it would aim to complete the split, structured as a tax-free spinoff, in the first quarter of next year.
The announcement came one month after Carl C. Icahn, the billionaire investor, said he owned a 7.7 percent stake in Manitowoc and pushed for a split of the company. Earlier, another activist investor, Ralph Whitworth’s Relational Investors, said it had acquired an 8.5 percent stake and similarly lobbied for a breakup.
Manitowoc’s stock, which closed Thursday at $19.24 a share, rose about 8 percent in after-hours trading. The company has a market capitalization of about $2.6 billion.
Although Manitowoc does not have the name recognition of Apple or Olive Garden, both of which have come under scrutiny by activists recently, its move on Thursday represents another victory for activist investors. Such investors, who often push loudly for change, have been emboldened by a number of prominent victories in recent years.
Still, Manitowoc emphasized its own role in choosing this course.
“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,” Glen E. Tellock, the chief executive, said in a statement. “We believe the separation of cranes and food service 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 $2.3 billion of revenue last year, operates in 18 countries and gets almost 60 percent of its revenue outside the United States, according to Manitowoc. The food service business, which makes equipment to help restaurants and convenience stores with refrigeration and cooking, had $1.6 billion of revenue last year.
As independent companies, Manitowoc said, these businesses will be able to pursue their own strategies and structure their own balance sheets how they see fit. Relational said last year that the two businesses “differ materially in their operating metrics and cyclical characteristics, which we’re convinced causes a perpetual discount in the share price.”
In a further sign of its willingness to listen to shareholders, Manitowoc said the two independent companies would dispense with the current staggered board structure and hold annual elections for their directors.