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Peltz takes stake in Ingersoll-Rand

by Lou Whiteman | Published May 9, 2012 at 10:48 AM

Activist investor Nelson Peltz on Wednesday, May 9, unveiled a 7.33% stake in Ingersoll-Rand plc, an industrial conglomerate that some investors have been pushing for a breakup.

Peltz's Trian Fund Management LP said in a regulatory filing it has acquired 21.07 million shares in Dublin-based Ingersoll-Rand, a stake valued at about $900 million. The share purchase would make Trian one of the company's largest shareholders.

In its filing Trian said it believes the shares are undervalued, and said it intends to meet with Ingersoll-Rand managers and directors to discuss strategy.

"During these discussions, the Trian Group intends to communicate its view that while the Issuer has an attractive collection of businesses, total shareholder returns and profitability have lagged peers, and that there is an opportunity to enhance shareholder value by improving certain key financial, operational, compensation and corporate governance metrics and by considering various strategic alternatives, including a restructuring of its key business segments," the company said.

Ingersoll-Rand, which manufactures heating, ventilation and air conditioning, or HVAC, products under the Thermo King and Trane brands, also has a security segment and makes products ranging from specialty tools to golf carts. It is valued by the market at about $12.6 billion. The company's shares closed on the Nasdaq at $42.27 Tuesday, in the middle of a 52-week range of $25.86 to $52.06.

The company, which sold its interest in a stationary refrigerated display case unit to private equity last summer for $370 million, has been under pressure from some on Wall Street to consider divesting more assets. A series of analysts late last year warned that Ingersoll-Rand is suffering from the so-called conglomerate effect, arguing that its businesses on a standalone basis would be valued higher by the market than the company's market capitalization.

Peltz is perhaps best known for his involvement in food companies including Wendy's/Arby's Group Inc., H.J. Heinz Co. and Cadbury-Schweppes plc, but has been spreading his wings in recent months. Last fall the investor announced a stake in State Street Corp., criticizing the company's board and calling on the money management firm to adopt a path that includes a spinoff to boost value.

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