Relational amasses stake in Manitowoc, to urge split -sources

NEW YORK, June 26 Thu Jun 26, 2014 4:05pm EDT

NEW YORK, June 26 (Reuters) - Activist investment firm Relational Investors LLC has amassed a roughly 8.5 percent stake in Manitowoc Co Inc and is urging the crane and food equipment company to break itself up, according to people familiar with the matter.

Relational, founded by investor Ralph Whitworth, believes that Manitowoc should spin off its high-margin food service equipment business into a separate entity in order to boost its stock prices, the people said on Thursday.

The Manitowoc, Wisconsin-based company has a market capitalization of roughly $4 billion and has two main divisions, Manitowoc Cranes and Manitowoc Foodservice.

The company makes several lines of cranes for heavy construction and commercial construction and also produces boom trucks. The foodservice division makes ice machines, refrigerators, deep fryers and other cooking equipment for businesses such as restaurant chains.

In January, Relational met with company management to recommend Manitowoc hire advisors to spin off its food business, according to the people familiar with the matter. Manitowoc's board has so far declined Relational's request for a meeting, the people added.

The investor has argued that food equipment businesses trade at a much higher multiple than crane companies and the combination of two distinct businesses has led to a perpetual discount in Manitowoc's share price, the people said.

Relational's position in the company, which is expected to be disclosed later on Thursday, would make it the company's second-largest shareholder, according to latest available data by Thomson Reuters.

As of March 31, Fidelity Management & Research ranks as Manitowoc's top shareholder with a 14.5 percent stake.

Representatives for Relational and Manitowoc could not immediately be reached for comment.

San Diego-based Relational, which takes stakes in companies it considers undervalued and lobbies for change, has successfully pushed for breakups of large industrial companies in recent years.

Most recently, aircraft seat maker and parts distributor B/E Aerospace Inc announced moves to split into two publicly traded companies, partly under pressure from Relational which has reported a 3.5 percent stake in the company.

Late last year, Timken Co bowed to pressure from investors led by Relational and agreed to spin off its steel unit. The investment firm also successfully convinced industrial conglomerate ITT Corp to break itself into three separate companies in 2011. (Reporting by Soyoung Kim in New York; Editing by Nick Zieminski)

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