Ingersoll-Rand Shares Jump on Possible Bobcat Sale, Stock Buyback
Diversified manufacturer Ingersoll-Rand said it is reviewing a sale or spinoff of its Bobcat machines and construction-related businesses as it shifts away from capital-intense heavy machinery.
The company also announced plans to double its share-buyback program.
The news pushed shares up more than 8% in New York Stock Exchange trading.
The company, which is moving away from cyclical businesses, plans to shift toward climate control, industrial and security businesses, it said in a statement. In February, it said it would sell its road construction machinery business to truck maker Volvo.
In addition to considering a sale, Ingersoll-Rand may also spin off the businesses to the company's shareholders, Ingersoll said.
The company said these businesses generated about $2.6 billion in revenues. In April, Merrill Lynch said in a research note that the Bobcat unit could sell for about $3 billion and allow it to acquire a company with less exposure to economic cycles. The division has been hurt by a downturn in U.S. home construction.
Ingersoll-Rand expects to finish the review process in the second half of 2007.
Ingersoll-Rand also said that it would increase its share buyback authorization to $4 billion from $2 billion and said it would complete $2 billion of share repurchases by the end of the 2007 third quarter. About $330 million in shares have been repurchased to date.
The timing of the remaining $2 billion of the share repurchase depends on the sale or spin off of Bobcat and other businesses, it said.
Ingersoll-Rand said it would continue to pursue growth through strategic acquisitions.