Tags: Oshkosh | Icahn | reject | offer

Oshkosh Rejects Icahn Takeover Bid, Reports Higher 3Q Profit

Sunday, 28 Oct 2012 04:22 PM

Specialty truckmaker Oshkosh Corp reported a higher quarterly profit on Friday, though a decline in its defense business weighed on revenue, and rejected a takeover offer from activist shareholder Carl Icahn.

Weak defense sales more than offset double-digit increases in other segments, and the company said it plans to cut 490 defense jobs in January.

Shares rose 1.0 percent to $30.05 as Oshkosh forecast non-defense equipment sales would continue to increase next year as U.S. housing recovers and international orders for emergency equipment rise.

The shares are up 40 percent this year.

Oshkosh, which had received an unsolicited offer from Icahn to buy all shares he does not already own, stood by its 2013 earnings forecast of $2.35 to $2.60 per share. The forecast does not include costs tied to Icahn's offer. The company said those costs may be substantial.

On Oct. 11, Icahn offered to buy all outstanding Oshkosh shares for $32.50 each - a 21 percent premium at the time.

Oshkosh's board unanimously rejected the offer, saying it was "inadequate", and adopted a shareholder rights plan that takes effect when a buyer amasses a 10 percent stake. . The company declined to answer analyst questions about the Icahn offer on an analyst call on Friday.

Icahn was not immediately available to comment.

The company also reaffirmed its plan to double adjusted profit in three years on improved margins and rising international sales..

The Oshkosh, Wisconsin-based company makes tactical vehicles for the military, specialty trucks for construction, and emergency vehicles, including ambulances and fire trucks.

In one sign that orders outside defense are mounting, concrete mixers were in greater demand in the fourth quarter, Chief Executive Charles L. Szews said in a statement. "We believe this is a strong sign that a housing recovery has commenced, which further supports our long-term outlook for our non-defense segments."

Sales of access equipment, such as aerial work platforms, boom lifts and towing products, rose in the quarter, mainly on higher volume in North America.

Fire and emergency equipment sales also increased, with large international sales. Commercial segment sales grew on demand for concrete mixers and refuse collection vehicles.

But defense truck sales fell, as expected, on lower shipments of trucks in the Family of Heavy Tactical Vehicles and MRAP All-Terrain Vehicle programs, and lower after-market parts sales. The drop was partially offset by higher Family of Medium Tactical Vehicle (FMTV) sales.

After the planned layoffs the company will have 3,500 defense employees, and 12,650 total staff, an Oshkosh spokesman said.

"We are actively pursuing international programs and other new business opportunities to limit the impact of expected defense downturn on our workforce and business, like the order for 750 M-ATVs to the United Arab Emirates announced in August," Szews said on the call.

M-ATVs are mine resistant all-terrain vehicles.

Oshkosh reported quarterly profit from continuing operations rose to $77.6 million, or 85 cents a share, from $40.3 million, or 44 cents per share, a year ago.

Excluding one-time items such as pretax restructuring charges tied to the exit of its Medtec ambulance business and pension-related charges, earnings were $60.2 million, or 65 cents per share, up from $45.5 million, or 50 cents per share, a year earlier.

Net sales declined 2.3 percent to $2.06 billion.

Icahn on Monday chose the former chief executive of Oshkosh's JLG unit, which Icahn wants spun off, as the first of a slate of directors he wants elected to the Oshkosh board.

Uncertainty over whether there will be a change in ownership and strategy keeps Oshkosh at risk of a downgrade of its junk-grade "BB" credit rating, said Dan Picciotto, a director of corporate ratings at Standard & Poor's.

There is the potential for the breakup of the company, he noted. "We also don't know how a takeover would be financed, and there is the potential for the company to be more highly leveraged."

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Specialty truckmaker Oshkosh Corp reported a higher quarterly profit on Friday, though a decline in its defense business weighed on revenue, and rejected a takeover offer from activist shareholder Carl Icahn.
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