Dallas, Texas 09/13/2013 (Financialstrend) – The Timken Company (NYSE:TKR) announced that its board of directors has now approved the plan of pursuing a separation of its steel business from its power transmission and bearings business via a spinoff. This will create 2 publicly-traded companies.
Under this new plan, the new-engineered steel company will now operate as an independent publicly-held company. It has an estimated annual-revenue of almost $1.7B. The B&PT business will continue operating as TKR with an estimated annual-revenue of around $3.4B. It is expected that this transaction will be tax-free to the company’s shareholders and is slated to be completed within a period of 12 months.
The company’s president and CEO, James W.Griffith said that the company has a very expansive and successful record of creating exceptional value for its stakeholders. He said that over the past several years, they have transformed the company’s business and also delivered very superior financial-performance. They have achieved this by expanding and diversifying their customer markets and their product lines.
He added that TKR has continued making accretive acquisitions and introduced many new capabilities across the world in a strategic manner. They see this as an initiative of building-out 2 very strong and stable companies that are focused on their businesses. This will provide their shareholders with more value. The CEO noted that the 2 standalone companies will carry on advancing their specific growth-strategies within their own core-markets. This is expected to add to their competitiveness.
This spin-off decision that has been taken by The Timken Company (NYSE:TKR) board members was a result of a thorough evaluation that was carried out by a strategy committee. The committee was made up of independent directors who had been appointed by the board as a response to input from the company’s shareholders.
With the help of these advisors, the committee evaluated the operational and financial implications of this business separation and the potential changes to TKR’s capital allocation strategy and corporate governance.