Manitowoc Completes Spinoff Of Manitowoc Foodservice

A quick update now that the transaction is official. The Manitowoc Company (MTW) completed the tax-free spinoff of Manitowoc Foodservice (MFS) on Friday, with shareholders receiving one share of MFS for every share of MTW owned. Expectations were for the legacy crane business, which kept the company name, to languish amidst a severe downcycle and for the foodservice business to attract a richer valuation and more investor interest. That is exactly what happened during the When-Issued trading period. Forbes had a nice piece looking at the two companies during the WI trading period and concluded that both ultimately ended up being fairly valued. 

The press release was relatively modest, but naturally filled with optimism. According to Manitowoc’s Chairman Ken Krueger:

We are extremely pleased to complete the spin-off of Manitowoc Foodservice. Under the leadership of Barry Pennypacker and Hubertus Muehlhaeuser, both Manitowoc Cranes and Manitowoc Foodservice are well positioned as independent, public companies to generate sustainable growth and value creation for their respective shareholders

Actually, that’s pretty muted optimism. Both companies face challenges, some more severe than others and unfortunately, not all within their control (downturn in customer’s business lines etc). The hope is that dedicated management will help right the ship and capture the upside when the market turns.

The deal execution marks another ‘win’ for Carl Icahn, who still owns over 7% of the shares, but it must surely feel like a hollow victory considering how far shares have dropped since he first got involved. I wonder if he will end up keeping his shares in both companies or if he ultimately ends up deciding to jettison one or the other. Hey, maybe the spin is just what was needed to turn things around.

Disclosure: Author holds no position in any stock mentioned.