Timken Company divides into two separate companies
The Timken Company and its board of directors has approved a plan to pursue a separation of the company’s steel business from its bearings and power transmission business through a spinoff, creating two publicly traded companies.
Under this plan, the new engineered steel company will operate as an independent publicly held company. The bearings and power transmission business will continue to operate as The Timken Company. The transaction is expected to be tax-free to shareholders and should be completed within 12 months.
The board recognizes the benefits shared between the businesses and will work to maintain them through a mutually beneficial business relationship between the two independent companies. Company leaders will also work to minimize the impact of incremental stand-alone costs that will be incurred as a result of the separation as well as leverage the opportunities that come from operating as two focused companies.
The new publicly traded engineered steel company would have estimated annual revenue of $1.7 billion and is expected to have strong prospects for growth and margin improvement. Over the past decade, the engineered steel business has implemented changes that increased margins, dramatically lowered its breakeven point and streamlined its supply chain. Headquartered in Canton, Ohio, the engineered steel company will include approximately 3,000 associates, seven manufacturing plants, four warehouses and five sales offices. The steel business is North America’s leading manufacturer of SBQ large bars for industrial markets and its largest producer of seamless mechanical tubing.
The Timken Company
Post separation, The Timken Company would have estimated annual revenue of $3.4 billion consisting of the Process Industries, Aerospace and Mobile Industries segments. The company will continue to focus on numerous fast-growing markets, supported by both organic expansion and acquisitions. The business leverages its technology and engineering capabilities to offer more reliable solutions and enhanced products with emphasis in emerging markets where infrastructure is fueling geographic growth. Its focus on applying its know-how and providing superior service differentiates the business in the areas of product performance, on-time delivery and service support.
The board plans to name Ward J. Timken, Jr. to lead the new engineered steel company as its chairman and chief executive officer. Timken’s career at the company began in 1992 in the steel business as senior steel business analyst. In 2004, he was named president of the steel business, and he was elected chairman of the board in 2005. Timken will continue to serve as chairman as well as oversee the steel business until the separation.
Following the separation, the board plans to name John M. Timken, Jr., non-executive chairman of The Timken Company. In that role, he assumes leadership responsibility for board activities and will oversee related board matters.
Timken will complete its current capital investment program for both businesses, which includes a new continuous caster for the steel business to come on-line in the second half of 2014, and expects investment levels to return to more normal levels thereafter.