Nelson Peltz has picked his next target, Pentair ($PNR) - a $11.6 billion market cap valve maker. Peltz Trian Partners owns 7.24% and unlike many of Pentair’s other theses of splitting up companies, Peltz’s thesis at Pentair is to consolidate the industry. Turns out that Peltz has been in talks with Pentair management for roughly a month.
He wants Pentair to acquire rivals and consolidate the sector. Specifically, “...the value for its shareholders by facilitating prudent industry consolidation through accretive mergers and acquisitions, continuing to generate standalone organic revenue growth and margin improvement, amending management’s incentive compensation programs to further strengthen the Issuer’s ability to attract, retain and incentivize executives and key employees and utilizing corporate reporting metrics, such as cash earnings per share, that highlight the Issuer’s strong free cash flow.”
There’s a number of smaller players in the space ripe for a buyout. Pushing for consolidation, versus a breakup, could be a positive shift in the winds for Peltz. Peltz’s last foray into the industrial space, Ingersoll Rand, only generated returns in-line with the market.
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