Investor Carl Icahn and his affiliates had talks with Oshkosh Corp (OSK.N) to push for a spin-off of specialty truck maker's JLG access equipment business, insulating it from Oshkosh's struggling defense operations.
Icahn believes the JLG segment's performance has improved enough for it to operate as a stand-alone business, according to a filing with the U.S. Securities and Exchange Commission.
Icahn representatives told Oshkosh management on Thursday that, "given the prospects and profitability of the Issuer's other segments, the value of JLG would not be recognized by shareholders in the foreseeable future," the filing said.
Oshkosh should immediately pursue a tax-free spin-off of the JLG business to shareholders, it said.
Icahn Associates is the biggest holder of Oshkosh shares, with a 9.5 percent stake, according to Reuters data.
Carl Icahn was not immediately available to comment.
"Oshkosh regularly reviews a wide range of options regarding its business and operations and considers the views of its shareholders," spokesman John Daggett said in an e-mail. "Oshkosh is committed to continuing to act in the best interests of the company and all of its shareholders."
Oshkosh bought JLG Industries, a maker of scissor lifts and other aerial work platforms, in 2006 for about $3 billion.
The access equipment unit had about $2 billion in sales in the fiscal year ended on July 1, roughly a quarter of the company's total sales.
JLG represented about 13 percent of the Oshkosh's operating income.
This is not the first time Icahn has called for Oshkosh to reassess JLG.
In a January letter to shareholders, he called on the company to consider strategic alternatives for the unit. Later that month, Oshkosh shareholders voted down an Icahn-backed slate of directors at the company's annual meeting.
Icahn also had called last year for a merger between Oshkosh and truck maker Navistar International Corp (NAV.N), a move that Navistar was willing to pursue at the time, but that Oshkosh opposed.
Oshkosh's shares rose 1.6 percent to close at $23.57 on the New York Stock Exchange and are up more than 10 percent so far this year.
Oshkosh reported higher earnings last month that beat Wall Street forecasts on sales growth in all of its non-defense businesses.
It said replacement of aging equipment boosted the sales of access equipment, including aerial platforms, boom lifts and towing products.
(Reporting By Lynn Adler in New York; additional reporting by Scott Malone in Boston; editing by Gerald E. McCormick and Andre Grenon)