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.
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."
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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.
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