Timken Shareholders Approve Steel Spin-Off

Timken Shareholders Approve Steel Spin-Off

Shareholders of The Timken Company approved a non-binding proposal to sell off the Canton, Ohio, company’s steel business, a prospect that has been building among activist shareholders for about six months.

Shareholders of The Timken Company approved a non-binding proposal to sell off the Canton, Ohio, company’s steel business, a prospect that has been building among activist shareholders for about six months. At Timken’s annual meeting, approximately 47 percent of the outstanding shares endorsed the spinoff, and 41 percent opposed it.

Of the shares voted, approximately 53 percent favored the proposal and 47 percent opposed it.

The shareholders also reelected all 12 member of the Timken board.

It’s not clear what action may follow the non-binding resolution. Timken’s management has argued against the proposed spin-off, which was first raised by shareholders the California State Teachers' Retirement System and Relational Investors LLC, which argued that the company’s stock was undervalued as a result of its organizational strategy. Their argument is that two separate, focused businesses would achieve a greater market value.

"The Timken board of directors takes its fiduciary responsibilities seriously and remains committed to driving shareholder value," stated chairman Ward J. Timken, Jr.  "We appreciate the thoughtful feedback we've received from our shareholders on the spin-off proposal as well as their broader input on corporate governance and capital allocation.

“The board will carefully evaluate the views of our shareholders and announce next steps within 45 days," the chairman added.

The Timken management argued that its longtime business strategy had been well established and endorsed by the market. "The simple fact is that our integrated business model is working. The deep synergies between our Steel and Bearings & Power Transmission businesses provide us with a tremendous competitive advantage in the marketplace. This enables us to deliver value for our customers and for our shareholders," according to a letter delivered to shareholders last month.

Timken has a plan in progress to update its two steelmaking plants in Canton. 

“We are investing more than $500 million in our Ohio steel plants to help us better meet customer needs,” group president Rich Kyle explained last month. “It underscores our long-standing commitment to advance our capabilities and continue to provide Timken high-performance steel products for some of the world’s most-demanding applications.”

The Timken Co. designs and manufactures mechanical components (bearings, transmissions, gearboxes, chain, related products and services) and high-performance steel.  The company had 2012 sales of $5.0 billion, and operates in 30 countries with approximately 20,000 employees.

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