Ingersoll-Rand to Spin Off Security Business, Buy Back Shares
Ingersoll-Rand confirmed on Monday that it is to spin off its security technology business and announced a $2 billion share buyback.
The security technology unit, which makes locks and steel door frames, represents the smallest of Ingersoll-Rand's business segments, with roughly $1.5 billion in sales for the last four quarters.
In conjunction with the spin-off and share buyback, the company, whose main business is heating and cooling systems, also raised its quarterly dividend to 21 cents per share.
Dublin-based Ingersoll-Rand has weathered years of choppy earnings as the housing recovery failed to pick up steam and generate demand for its products. Activist firm Trian Partners bought a roughly 7 percent share in the conglomerate in May, and its chief Nelson Peltz was named to the board in August.
In the intervening months, Peltz has pressured the board to pursue a break-up of the company, a diversion from Ingersoll-Rand's previous strategy of selling off smaller businesses. But with the shares rising more than 60 percent throughout the year in New York, a full break-up has become less attractive, people familiar with the situation told CNBC over the weekend.
The company has long been reviewing the direction of its various security products. In 2011, Ingersoll-Rand divested a portion of its security technology business to Kratos Defense & Security for $20 million.
The same year, it also sold a majority stake in Hussman, a refrigerated display case business, to private equity firm Clayton Dubilier & Rice for $370 million. At the time of the deal, the company said it would put the cash toward its existing $2 billion share repurchase program.
—By CNBC's Kayla Tausche; Follow her on Twitter: @KaylaTausche. Reuters contributed to this report.