Textron Inc. rose to a three-month high after Royal Bank of Canada said the maker of aircraft, golf carts and auto parts is a potential breakup target for activist investors.
The shares climbed 1.5 percent to $28.96 at 4:03 p.m. in New York, the highest closing price since April 16. Textron has gained 17 percent this year, as the Standard & Poor’s 500 Index advanced 19 percent.
Textron may be worth $42 a share in a breakup, 45 percent more than today’s close, Robert Stallard, an RBC analyst in New York, wrote in a note today. Activist investors have pressured industrial companies such as Ingersoll-Rand Plc, pushed by Trian Fund Management LP’s Nelson Peltz to spin off its security unit, and Timken Co., which hired Goldman Sachs Group Inc. to assess options for its steel division after Ralph Whitworth’s Relational Investors LLC backed a split.
“Activist investing is on the increase,” Stallard, who rates Providence, Rhode Island-based Textron outperform, said in the note. “We think Textron looks a far more viable candidate for restructuring than some other public companies.”
Textron’s four industrial divisions, which represented 24 percent of sales last year, could attract buyers from Stanley Black & Decker Inc. to Deere & Co., he said. For aircraft units Bell Helicopter and Cessna, which accounted for 60 percent of revenue, potential acquirers include Boeing Co. and General Dynamics Corp., according to the note.
Textron had no comment on the RBC note, Dave Sylvestre, a company spokesman, said in an e-mail.