Ralliant Corporation (NYSE:RALL) shares gained 4.5% on Tuesday following media reports that activist investor Irenic Capital Management has accumulated a stake in the precision technology company and is engaging management on potential operational changes.
According to two people familiar with the discussions who spoke on condition of anonymity, Irenic holds about 2% of Ralliant and has met with company leadership on several occasions to press for steps it believes would enhance performance at the roughly $4.7 billion company. The hedge fund is based in New York, while Ralliant is headquartered in Raleigh, North Carolina.
One of Irenic’s principal requests is that Ralliant commit to larger and faster share repurchases. Ralliant said in its early February earnings announcement that the board’s previously approved $200 million repurchase authorization from last year "remains fully available." The activist investor feels management could move beyond that authorization and pursue a larger buyback, potentially through an accelerated share repurchase program - a contract-based approach that allows a company to immediately repurchase a significant volume of its own stock.
In addition to advocating for an enlarged buyback, Irenic has urged the company to tighten control over day-to-day operating expenditures. The push for expense reductions follows instances in which Ralliant surprised investors by raising its cost forecast on two occasions, including increases tied to merit raises and other employee-related expenses, the sources said.
Separately, the activist is seeking a greater strategic focus on Ralliant’s defense and electronics business segments, according to the same sources. The reports do not provide details on any specific plans or commitments from Ralliant in response to those recommendations.
The discussions between Irenic and Ralliant management have been described as private. The company has previously acknowledged the availability of its repurchase authorization but has not announced changes to buyback size or timeline in connection with these reported talks.
Market reaction to the reporting was immediate, with the stock moving higher on the prospect of shareholder-return measures and cost discipline. The ultimate outcome of the engagement and whether it will result in concrete changes from the company were not disclosed in the reports.
Contextual note: Details on ownership, private meetings and the activist’s specific requests are based on sources familiar with the matter who were not authorized to comment publicly.