* Peltz joins board's governance, finance committees
* Peltz's Trian has proposed breaking up company
* Shares fractionally lower
Aug 13 Ingersoll Rand Plc named Nelson
Peltz to its board on Monday, three months after the activist
investor began pushing for changes at the manufacturer of air
conditioners and security systems.
The move averts a potential proxy fight with Peltz, whose
Trian Fund Management LP holds a 7 percent stake in Ingersoll.
Ingersoll said it is evaluating a number of strategic
options, including those put forth by Peltz, and expects to
complete its review by the end of the year. It said Peltz's
addition to the board does not change the timetable for the
Trian has proposed restructuring Ingersoll's main business
units or separating them into separate, publicly-traded
companies, a move one analyst said makes strategic sense.
Analyst Brian Langenberg of Langenberg & Co, calling Peltz
"a pretty sharp cookie," said air conditioning and security
systems do not fit together naturally. "There's a case to be
made for breaking up the company if you want to buy the pieces,"
ABB's recent takeover of Thomas & Betts, and
Eaton's pending deal to buy Cooper Industries
show there is an "urge to merge" in a slow economic environment,
the analyst said. However, Ingersoll CEO Mike Lamach should also
be given credit for trying to make the company more profitable,
"Lamach's job should not be in jeopardy. He's been doing the
right things," Langenberg said.
Lamach, who took over as CEO from Herb Henkel in 2010, has
put more resources into emerging economies, which account for
about a quarter of the company's sales, and is looking to expand
the proportion of revenue it gets from parts and services.
Ingersoll has also restructured its businesses to make them
more efficient and has cut the number of manufacturing
facilities, setting up the company for potentially faster growth
once housing and commercial construction markets recover.
AN EXPANDED BOARD
Trian has said Ingersoll should raise operating margins
closer to the level of peers and consider using debt to fund a
more aggressive stock buyback or a special dividend, according
to a U.S. regulatory filing. Trian also said it was seeking more
independent directors on Ingersoll's board and that executive
pay needed to better reflect performance.
Peltz will join the Corporate Governance and Nominating
Committee and the Finance Committee of the Ingersoll board.
In June Peltz declined an invitation to join Ingersoll's
board, citing restrictions the company had imposed on him, such
as precluding Trian from calling for an extraordinary general
meeting of shareholders until the 2013 annual meeting. That
restriction has been lifted, according to an Ingersoll
A Trian representative declined comment.
Ingersoll shares were down 4 cents to $45.04 in afternoon
trading. They have gained about 7 percent since Trian unveiled
its stake in the company in early May.
Ingersoll makes industrial air compressors, security systems
and golf carts, but its biggest business is heating and cooling
systems as a result of its 2008 purchase of Trane. Its
competitors in heating and cooling include Johnson Controls'
York business, United Technologies Corp's
Carrier unit and Lennox International Inc.
Analysts have said Ingersoll's air conditioning and security
businesses fit together, so the likely focus for future
divestitures would be the industrial business, which includes
air compressors and specialty vehicles.