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Timken Split Into Two Publicly Traded Companies

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Timken Split Into Two Publicly Traded Companies
[ Business]

On September 5, 2013, the Timken Company officially announced that they would be splitting their company into two separate entities. After the announcement, Timken stock rose 6.2% during after-market trading.

Timken manufactures steel, bearings and power transmissions. The company split will form a new steel company (no name announcement yet) which will continue to manufacture carbon and alloy steel. The Timken Company will retain the bearing and power transmissions business. Both companies will be independent, publicly-traded entities.

Why the split?

There are two main reasons for the Timken split. For one, the company believes that operating two separate entities will allow for revenue growth due to focus and specialization. Based on 2012 segment sales, Timken predicts that the new steel company will produce estimated revenue of $1.7 billion annually and the bearings/transmission business will produce estimated revenue of $3.4 billion annually.

The second reason for the Timken split was pressure from the company’s largest shareholder; an activist investor that was pushing Timken to split the business into two sectors. This investor manages pension funds and had the backing of the California State Teachers’ Retirement System (CalSTRS) in regards to this split.

 

After the two companies have split, the Timken Company will have 17,000 employees and the new steel company will have 3,000 employees. The Timken Company will focus on emerging markets and technologies and the steel company will focus on premium steel products such as carbon and micro-alloy steels. Currently, the Timken steel business is the largest SBQ large bar and seamless mechanical tubing manufacturer in North America.

Timken Split - Steel Bars

[Timken Co. Steel Bars]

The company split will take approximately 12 months after which Timken President and CEO, James W. Griffith, will retire and be replaced by Richard G. Kyle.  Ward J. Timken, Jr. will be named the new steel company’s chairman and CEO.

Current Timken shareholders have been invited to a conference call to discuss the changes. A replay of the call will be available from 12:00 pm EST September 6, 2013 through September 20, 2013.

 

[Images via Timken Co.]

Timken Split Into Two Publicly Traded Companies
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  • Sandy Thomas

    This is NOT a good move. How can the California Teachers’ Union, who only hold 10% of Timken stock, dictate that this should be done?? Also, Union members were not even given a heads up on this.

    • Togetherwestand

      All shareholders were sent an informational packet before the shareholders meeting along with your voting information. This included the employees that hold stock as well as outside shareholders. If you didn’t read the information and place your vote then you have no one to blame but yourself. The steel union was given the same notice as everyone else on what was purposed. Someone beside the teachers’ union voted for this if it had a 53 percent vote. I agree that it is not a good thing but we as employees had our chance to express our vote and from what I have heard may didn’t or voted neutral. We should have backed the board and our leaders when they needed us. This split is the work of a UNION.

  • hollywoodnc

    Well…there goes the QUALITY of a good bearing! They’ll probably offshore this company soon to China.

  • Larry Gardner

    What does the activist investor know about making bearings or the steel that goes in to them? The real reason for the split is to weaken the strength of a great company. If this guy knew anything, he would have his own company.

  • Brent Vales

    I’m not sure about all this, I just hope it IS NOT another move to try and screw the employees out of more jobs in that area of Ohio by eventually sending that work overseas too. They have already lost a tremendous amount of good paying jobs from this Co., and others ie; The Hoover Plant, we all know what happened there!!

    • Brent Vales

      P.S. I just hope my buddy Big Daddy “D” takes them to the cleaners, B4 they screw up the stock and pension plans.

  • mike

    another way to offshore this company. they could do it I wont buy it. What a shame

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