Timken completes sale of Timken Latrobe Steel
The Timken Company completed the sale of its Latrobe Steel subsidiary in Latrobe, Pennsylvania to a group of investors led by the Watermill Group, Hicks Holdings and Sankaty Advisors. Timken received approximately $215 million in cash, providing resources for general corporate purposes, including strategic growth initiatives and pension funding.
Latrobe Steel manufactures and distributes specialty steel for the aerospace, high speed, and tool and die markets.
In 2005, The Timken Company had sales of $5.2 billion with $1.6 billion, excluding intersegment sales, from the company's Steel Group. Latrobe Steel sales, which have benefited from the strong aerospace and specialty steel markets, were $345 million or nearly 7 percent of the company's overall sales. In accordance with applicable accounting principles, the results of Latrobe Steel will be reclassified to discontinued operations for 2006 and preceding years.
For the first nine months of this year, the estimated impact on the Steel Group is approximately $266 million in sales and approximately $42 million in EBIT. The sale will have a negative impact on Timken's earnings in the near term.
Timken purchased Latrobe Steel in 1975 to have direct access to its coil-making capacity to support the company's bearing manufacturing. In recent years, Timken's declining demand for internally manufactured roller wire has decreased Latrobe Steel's synergy with the company's bearing business.