Along the lines of strategic initiatives to realign its operations, The Manitowoc Company, Inc. MTW declared the sale of its Kysor Panel Systems business to an affiliate of D Cubed Group LLC for approximately $85 million. The transaction is subject to certain adjustments.
In addition to Manitowoc’s Kysor Panel Systems, D Cubed Group LLC, a private market investment firm, also acquired Hill Phoenix’s Walk-Ins business from Dover Corporation DOV to form a new private company named KPS Global. Financial terms of the deal have not been declared yet.
Manitowoc’s Kysor Panel Systems is a leading producer of wood frame and high-density rail panel systems for walk-in freezers and coolers for the retail and convenience-store markets. On the other hand Dover’s Hill Phoenix’s Walk-Ins is focused on food retail.
D Cubed is joined in the acquisition by other industry veterans, strategic investment partners and the KPS Global management team.
The deal will support both Manitowoc’s and Dover’s restructuring initiatives. The divestiture will enable the companies to focus more on core businesses by leveraging their core strengths, enhancing operating margins and positioning the businesses for long-term success.
Notably, the combined company, KPS Global will comprise combined annual revenues of over $200 million (of which $95 million is from Hill Phoenix’s Walk Ins business). Headquartered in Texas, KPS Global will deliver greater service levels, technology and innovation to customers.
Manitowoc intends to use the the proceeds from the Kysor Panel divestiture to further reduce its debt and financial leverage. The sale will assist in improving focus on core brands within its Foodservice segment.
Manitowoc has initiated a restructuring plan to focus its resources on those areas that will deliver the highest returns on investments. These include product line simplification, boosting productivity and facility efficiency, as well as right-sizing the organization. These initiatives, which include its recently announced plan to close the Cleveland facility, in addition to the 80/20 product rationalization program, are anticipated to generate approximately $100 million in savings over the next three years.
Further, Manitowoc’s board of directors has approved a plan to separate its Cranes and Foodservice businesses into two independent, publicly-traded companies. This move is deemed advantageous as it will create two companies that are industry leaders and have distinct strengths. Manitowoc is on track with the separation, which is expected to be completed by the first quarter of 2016. This will allow Manitowoc to pursue its growth strategy as market conditions improve.
Manitowoc currently has a Zacks Rank #4 (Sell).
Some better-ranked stocks in the sector are Belden Inc. BDC and John Bean Technologies Corporation JBT. Both the stocks carry a Zacks Rank #2 (Buy).
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