Breaking News from CNBC's Kayla Tausche: Ingersoll-Rand to Spin off Security Business, Boost Buyback: Sources
When: Today, Sunday, December 9th
By: Kayla Tausche | General Assignment Reporter
CNBC.com | Sunday, 9 Dec 2012 | 7:30 PM ET
Ingersoll-Rand is nearing a deal to spin off its security technology business after months of negotiations with an activist investor, according to people familiar with the deal.
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. The spin-off of the business could be announced as early as Monday, these people said.
In conjunction with the spin-off, Ingersoll-Rand is also expected to announce a new $2 billion share buyback program and a roughly 30 percent increase to the company's dividend, currently $0.16 per quarter, the sources said.
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, the people familiar with the deal said.
Representatives for Ingersoll-Rand declined to comment.
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
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