Icahn suggests Oshkosh sells JLG
By Maria Hadlow09 January 2012
In an open letter to other Oshkosh shareholders US businessman and activist investor Carl Icahn suggested the management team should be replaced for failing to confront business challenges. Among other suggestions he recommended the possibility of selling JLG.
Mr Icahn, who is Oshkosh's largest shareholder with 9% of the stock, said; "Shareholders deserve a real plan to deliver value today centred on the following: Immediately explore alternatives for JLG to reallocate capital to debt reduction, returning capital to shareholders and providing opportunities to pursue a more active acquisition strategy surrounding core businesses."
Other ideas included capitalising on a weak economy by consolidating niche businesses and entering synergistic product lines, aggressively seeking small acquisitions and joint ventures in core product areas and preparing the company to participate in the upcoming defence industry consolidation.
Mr Icahn's letter came, in part, in response to a letter dated 3 January and sent to shareholders by chief executive Charles Szews and chairman Richard Donnelly in which the company criticised Mr Icahn's previous actions.
It said "Mr Icahn has not demonstrated that he has a plan or a team that can lead your Company and deliver value to all Oshkosh shareholders. Mr Icahn is seeking to control nearly half of the Oshkosh Board, yet has provided no substantive ideas or analyses to enhance value for all shareholders.
"Instead - only days prior to the nomination deadline - Mr Icahn cobbled together a slate of four candidates who are currently employed by him or one of his entities and another who has had a long relationship with Mr Icahn since their college days.
"We have met with Mr Icahn and his team multiple times and they provided positive feedback regarding Oshkosh, our management team and our current strategy. During those meetings, Mr Icahn also confirmed that he does not understand the defence business or the issues facing defence suppliers.
Oshkosh has not responded to Mr Icahn's latest letter.
In his letter, Mr Icahn accused the Oshkosh board of being fixated on past performance and refusing to acknowledge that the company's stock has fallen in comparison with its peers.
"I am not sure why this management team feels that their past stock performance is an attribute for which they are owed loyalty, considering Oshkosh was trading at $35 per share at the start of 2011 and now trades in the low $20s. The company is also one of the worst performing among its peers in terms of stock performance over the past five years, and the worst in terms of 2012."
Mr Icahn has recommended six associates as director nominees for the Oshkosh board.