Shares of Owens-Illinois Inc. (NYSE: OI) jumped 9.9% on Friday after activist investor Atlantic Investment Management called for the glass-container specialist to take a number of actions to maximize shareholder value.
Continue Reading Below
According to an SEC filing today, Atlantic has sent a letter to Owens-Illinois management urging them to hire a financial advisor to explore the sale of their European business, arguing that "there is substantial upside to OI's share price on a sum-of-the-parts basis."
Then, Atlantic says, OI should use those proceeds to repurchase at least $1 billion in shares and pay down $2 billion or more in debt. Finally, it argues that OI should initiate a dividend of $0.15 per quarter and allocate 75% of its annual free cash flow to additional stock buybacks.
If the company does so, Atlantic believes Owens-Illinois stock could more than double to over $40 per share.
This doesn't guarantee that Owens-Illinois will follow Atlantic Investments' advice. But Owens-Illinois did acknowledge the letter in a press release today, adding that it appreciates Atlantic Investment's support and -- just as it does with all shareholders -- will take its input "seriously."
In any case, with Owens-Illinois stock down 28% in the year leading up to this development, it's no surprise to see shares rebounding today in response.
10 stocks we like better than Owens-IllinoisWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Owens-Illinois wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of August 6, 2018