Ingersoll-Rand PLC (NYSE:IR), an industrial machinery conglomerate, appointed activist investor Nelson Peltz as the 12th member of its board of directors on August 10. Peltz is the chief executive officer and founding partner of Trian Fund Management LP, which holds a 7 percent stake, and is one of the largest shareholders of the industrial machinery conglomerate.
According to the press statement of Ingersoll-Rand, as one of the independent directors of the company, Peltz will also serve in the Corporate Governance and Nominating Committee and Finance Committee of the board of directors.
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Analysts believe the appointment of Peltz in the board of Ingersoll-Rand PLC (NYSE:IR) will prevent the proxy fight between the industrial machinery conglomerate and Trian Management LP. In May, Peltz said the shares of Ingersoll-Rand were undervalued in the market. In order to improve the value of the industrial machinery conglomerate shareholders, Peltz recommended the break-up of its core business units into three standalone publicly traded entities. The company manufactures Trane heating and air-conditioning systems, Club Car golf carts, Schlage door locks and Thermo King refrigerators for truck trailers and air compressors.
In a statement Peltz said, “Trian Partners is currently one of the largest shareholders of Ingersoll Rand, and we believe the company has great businesses and tremendous potential. I look forward to working closely and constructively with the Board and management, as Ingersoll Rand evaluates strategic opportunities to drive growth and shareholder value, including proposals presented by Trian Partners and other alternatives identified by the Board. At Trian, we see a future where Ingersoll Rand’s proven brands and leading market shares produce peer leading shareholder returns.”
Peltz is well-known as one of the best activist investors, who implements effective strategies in increasing the profitability of companies such as H.J. Heinz Company (NYSE:HNZ) and The Wendy’s Company (NASDAQ:WEN).
According to analysts, the performance of the Ingersoll-Rand PLC (NYSE:IR) stock for the past year is moderate. During the second quarter of 2012, the company reported $365.8 million in profits or $1.16 per share. During the same period in 2011, the company’s profit was $92.3 million or 26 cents per share. Its second quarter profit this year included 15 cents per share impact from a tax benefit. Its total revenue declined by 6.6 percent to $3.82 billion during the second quarter of the current fiscal year.
The company raised its earnings forecast for the third quarter revenue from $3.6 billion or 95 cents to $3.7 billion $1 per share based on better margins and operations.
Last year, the company increased its dividends, and implemented its plan to repurchase $2 billion worth of shares. Since the implementation of its shares, buyback program, $1.3 billion worth of shares have been repurchase by the company.
Ingersoll-Rand PLC (NYSE:IR)’s stock value went up by 48 percent for the past year. As of 11:34 AM, ET at the New York Stock Exchange, IR shares is trading at $44.58 per share. Its market capitalization is around $13.69 billion.