Why Timken split

Timken Bows to Activist Investors, and Splits in Two

Crunching reams of data in search of undervalued stocks, analysts at Relational Investors, a firm that manages $6 billion mostly on behalf of pension funds, happened upon a Canton company called Timken, which was in the unglamorous business of making steel and bearings. Controlled by the Timken family for more than a century, the company looked cheap compared with its industrial peers, at least according to Relational’s analysis. A few more calculations suggested that Timken’s shares might fetch more if the company were split in two. Throughout the summer and fall of 2012, Relational’s traders in San Diego quietly accumulated shares, and by November, the firm owned nearly 6 percent of Timken. Relational is not a typical buy-and-hold shop. On Wall Street, it is what’s known as an activist investor, one of a number of increasingly powerful firms that acquire big stakes in companies and pressure executives to make changes to “unlock value” and drive share prices higher. After focusing on smaller companies with dysfunctional management and languishing shares, activist investors are now taking on some of the most prominent — and successful — giants, including DuPont, Amgen, Procter & Gamble, eBay, and even Apple, the single most valuable American company. As a result, they’ve become something of a boogeyman in corporate boardrooms, pushing for bigger buybacks, fatter dividends and sometimes new chief executives. In the case of Timken, the activists demanded the breakup of the company. And last summer, after a contentious public fight and a shareholder vote, Timken relented, splitting itself into two companies, one focused on bearings, the other on steel.
Comment: Image ... the Timken Four Aces. Quotes: TKR and TMST

No comments:

Post a Comment

Any anonymous comments with links will be rejected. Please do not comment off-topic