Ingersoll-Rand plans to spin off its commercial and residential security businesses within the next year after hedge-fund manager Nelson Peltz pressed for a breakup to boost shareholder value.
Ingersoll's strategy, which also includes a stock buyback and a 31 percent dividend boost, marks the culmination of talks with Peltz's Trian Fund Management LP, which disclosed a 7.3 percent stake in May. Peltz had threatened a proxy battle.
The new security company have about $2 billion in yearly sales, while the existing Ingersoll will generate about $12 billion, retaining climate-control operations with brands such as Trane and American Standard. The move will let investors "value our different businesses separately, said Chief Executive Officer Michael W. Lamach, who will stay at Ingersoll.