New York, Dec 18 :
Ingersoll-Rand Plc (IR) is expected to announce it will spin off its security
division, two people familiar with the matter said, as the industrial
conglomerate cedes to pressure from activist investor Nelson Peltz to unlock
more shareholder value.
The company, which has a market value of more
than $14.5 billion, also plans to buy back shares and increase dividends, one of
the sources said.
The spin-off, buybacks and dividend hikes come as part
of a strategic review undertaken by Ingersoll after Peltz's Trian Fund
Management LP acquired a stake of about 7 percent and proposed a break-up of the
company. Peltz joined the company's board in August after three months of
agitating for changes at the manufacturer.
Ingersoll's security
technology division -- which makes mechanical and electronic locks as well as
steel doors -- had operating income of more than $330 million in 2011 on revenue
of $1.63 billion.
The sources, who declined to be identified as the
matter is not public, did not put a value on the division. Ingersoll and Peltz
declined to comment.
Peltz has, among other proposals, suggested
separating Ingersoll's main business units into three standalone publicly traded
companies focused on air conditioning and heating, security, and the remainder
of its industrials businesses.
Some analysts agreed, saying that
Ingersoll's shares were undervalued because of its disparate businesses. Several
other diversified conglomerates have also decided to break up, often under
pressure from activist investors.
Activist investor Ralph Whitworth
pressured industrial conglomerate ITT Corp (ITT.N) to split up its defense and
water purifying businesses. Other companies announcing breakups or major
divestitures include Tyco International Ltd (TYC.N), Kraft Foods Inc (KFT.O) and
Fortune Brands (FBHS.N).
Ingersoll's biggest business is heating and
cooling systems as a result of its 2008 purchase of Trane. It also makes
industrial air compressors and golf carts.
Its competitors in heating and
cooling include Johnson Controls' (JCI) York business, United Technologies
Corp's (UTX) Carrier unit and Lennox International Inc
(LII).
Ends
SA/EN
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