On Tuesday, Relational Investors LLC announced that Relational and the California State Teachers Retirement System (CalSTRS), collectively owners of 7.31 percent of The Timken Company, sent a joint letter to the Board of Directors of Timken once again urging a separation of Timken's steel and bearings businesses to unlock significant value for all shareholders.
Previously, Relational voiced its belief that by separating the steel and bearing businesses, "Timken would realize improved operating performance and the investment community could appropriately value the earnings profile of each business - resulting in maximized shareholder value and long-term potential for these businesses and the communities that they serve."
In their letter to Ward J. Timken, Jr. Chairman of the Board, Relational and CalSTRS highlight key aspects of this analysis as well as recent excerpts from third-party analyst reports, demonstrating broad support by the investment community for a separation of Timken's businesses.
Among the main points contained in their letter to the Board of Directors, Relational said: A separation will enable a fundamental change to valuation; a separation will increase management and investor focus; spin-off transactions have created substantial value for shareholders in the past; separation should not be disruptive to Timken and the community: A separation should not meaningfully disrupt the Canton community or Timken's employees; The Timken Company has a history of poor corporate governance.
Relational and CalSTRS called for "Timken's Board to promptly respond to the investment community and take action to separate the company's businesses to unlock value for all shareholders."