Canton, Ohio-based The Timken Company announced Thursday that 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. Earlier this year, Timken's largest shareholder, California-based Relational Investors passed a shareholder resolution that called for Timken to split its business into two, following months of public back-and-forth from the parties.
Under this plan, the new engineered steel company will operate as an independent publicly held company with estimated annual revenue of approximately $1.7 billion. The bearings and power transmission (B&PT) business will continue to operate as The Timken Company with estimated annual revenue of approximately $3.4 billion. The transaction is expected to be tax-free to shareholders and should be completed within 12 months.
James W. Griffith, president and chief executive officer, noted that the two stand-alone companies will continue to advance their distinct growth strategies within their respective core markets, which is expected to further improve competitiveness. Griffith will continue as president and chief executive officer of The Timken Company until the separation is complete, at which time he plans to retire after 30 years of service. The board plans to name Richard G. Kyle as The Timken Company's new president and chief executive officer, succeeding Griffith. Until then, Kyle has been named chief operating officer of the B&PT business.
The board also plans to name Ward J. "Tim" 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.
At a later date, The Timken Company and the new stand-alone engineered steel company will name new separate boards of directors, which are expected to include a strong base of directors drawn from The Timken Company's current board membership along with new board members.