I'm All For Pierce Independence

[Gen1FD]

Oshkosh shares up 16 percent as Icahn seeks talks


NEW YORK | Fri Jul 1, 2011 3:10pm EDT

NEW YORK (Reuters) - Shares of Oshkosh Corp (OSK.N) shot up 16 percent on Friday after billionaire investor Carl Icahn reported a 9.5 percent stake and said he was seeking talks with the specialty truck maker to enhance shareholder value.

Oshkosh, which makes tactical vehicles for the military and specialty trucks for construction, is the latest diversified industrial and defense company to be targeted by activist investors for a potential breakup, at a time when defense stocks languish on fears of softening military spending.

Shares of Wisconsin-based Oshkosh, which also makes fire and emergency equipment and cement mixers, were 16 percent higher at $33.62 on the New York Stock Exchange in afternoon trading, valuing the firm at more than $3 billion.

Analysts said a split of its defense and commercial businesses is a possibility, but some said profits from any sale of assets could remain subject to hefty taxation unless Oshkosh could find a way to spin off the entities.

"Given Icahn's history and the fact Oshkosh is a relatively small company, we believe there may be a better than average chance that OSK may get carved up in a future strategic action," said Peter Skibitski, analyst at SunTrust Robinson Humphrey.
"We estimate a potential carve up value for Oshkosh at roughly $35 (a share)," he said.

Ralph Whitworth's Relational Investors LLC, which pressured industrial conglomerate ITT Corp (ITT.N) to split up its defense and water purifying businesses earlier this year, last week reported a stake in L-3 Communications and urged the contractor to divest low-performing units.

"While near-term end market concerns continue, an activist shareholder could unlock significant value, in our view," Jefferies & Co. analyst Stephen Volkmann said of Oshkosh in a note to clients on Friday.

Oshkosh said in a statement late on Thursday it is open to dialogue with shareholders, adding that the firm believes Icahn's investment is "evidence of his belief in the value of the company."

Icahn, who has agitated for big changes at companies, held 9.51 percent of Oshkosh shares as of June 20, according to a Securities and Exchange Commission filing on Thursday.

A tough U.S. defense spending outlook and uncertainty over state and local budgets has weighed on Oshkosh shares this year, which are still down about 6 percent year to date despite Friday's rally.

"Currently Oshkosh is essentially trading at a depressed defense multiple with the market giving almost no credit for the construction and specialty truck related business," Jefferies' Volkmann wrote.

He added that the company's military truck business "could be attractive" as defense budget limits trigger some consolidation.

It is not clear if any defense contractors would find the defense part of the company attractive, especially at a time when the United States winds down wars in Iraq and Afghanistan, people familiar with the industry said. But private equity firms could potentially be interested in different parts of the company, they added.

(Reporting by Roy Strom and Soyoung Kim in New York, and Karen Jacobs in Atlanta; Editing by Tim Dobbyn, Dave Zimmerman)

[Command6]

E-One/Federal Signal
ALF/Damlier Benz
Pierce/Oshkosh

Based on history, I would have to agree that independence is best.

C6

[Hehateme]

Heard the axe dropped yesterday.

Some permanent "layoffs" of key employees.

[rmcatee1]

Heard the axe dropped yesterday.

Some permanent "layoffs" of key employees.

Ok, I will bite.....what have you heard? I see nothing published in the local press or business publications for Pierce.

[islandfire03]

If you look at Icahns history as a corporate raider ,you will see he comes in , cuts overhead[read staff with benefits ] sells off profitable units to build up the stock value before bailing out with his profits leaving behind a company in shambles.

[rmcatee1]

I read that about him while I was trying to find the information that "hehateme" talking about. Seems like a real classy guy. Sure hate to see him at my front door! Geez...

[LT2410]

I can confirm there were layoffs that took place on Thursday although I'm not exactly sure how many people were affected. It appears Pierce attempted to do it quietly and therefore there is nothing that has hit the media yet. From what I've heard, there were at least 15 office/mgmt staff that was let go. I'm unsure how production was affected.

From a stockholder's perspective, I doubt anyone can say they didn't see this coming. Pierce's fiscal year ends on Septermber 30th and my gut tells me they are going to show a substantial loss for the year. By laying people off, they can still report "good news" during their earnings call they have taken cost reduction "measures" to return to profitability. Not to mention the "newest" stockholder who I'm sure is waiting for his seat on the board to really shake things up.

The entire market is off and the old Pierce is a thing of the past, they have no option but to drastically cut costs to adapt to the ever changing market. There is no way they can continue to operate like they have in the last 3-5 years. Stockholders tend to get quite vocal when they consistently see earnings in the (red)!

[rmcatee1]

I'm aware that the industry as a whole is down across the board. And it won't get better anytime soon either I'm afraid. The fire apparatus market tends to be about 12 to 18 months behind the rest of the economy since it is so dependent on tax revenues.

I hate to think how the business will look in the next 18 months. I'm really surprised that we haven't seen any manufacturers close yet.

[chiefengineer11]

If you look at Icahns history as a corporate raider ,you will see he comes in , cuts overhead[read staff with benefits ] sells off profitable units to build up the stock value before bailing out with his profits leaving behind a company in shambles.

Shades of Gulf & Western. No telling how many good, going companies they destroyed.

[islandfire03]

Shades of Gulf & Western. No telling how many good, going companies they destroyed.

His history is dark and prominent in the destruction of many good companies in the name of making money.

[Rescue101]

His history is dark and prominent in the destruction of many good companies in the name of making money.

Remind you of anyone ELSE we know? T.C.

[neiowa]

Remind you of anyone ELSE we know? T.C.

Soros (Obama) ??

[ZMastr28]

RESPONSE TO: COMMAND 6

You forgot another player in the mix, Seagrave. Since being bought out by an "investment club" as I will call it, in 2003, there has been a revolving door of management. In 1981 when they were ready to shut their doors, they were bought out by an aggressive business person who stabilized the company, allowing for slow sustained growth, nothing flashy but impressive. The reason why he had to sell, has many versions to it. The important thing is it was sold to a group that is only concerned about profits. They have been on a slash and burn campaign for a couple of years now to try and make the investment group happy, while the person in charge knows little or nothing about what they are actually trying to sell and they have now lost what little market share they did have......it's all about the money. Don't look to Pierce to be a "stand alone" company, they are way too big to pull something like that off. It seems once they go the route of the "investment" club, they never go back.

[nys1]

Add Ferrara to that list -- Merit Capital Partners.

[Command6]

The fire apparatus business is a niche industry and is very "fickle."

The key numbers that Wall Street is looking for is 10/10: Minimum ten percent profit and ten percent annual growth. Your not going to find that sort of growth in this market in this economy. That's when the stockholders start to grumble.

[Command6]

RESPONSE TO: COMMAND 6

You forgot another player in the mix, Seagrave.

I sure did. Also forgot to mention Crimson/Spartan.