This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Relational Investors LLC And CalSTRS Urge Timken’s Board To Take Action To Separate The Company’s Businesses To Unlock Shareholder Value

SKF entered into long-term supply agreements with Ovako to ensure a continued supply of high-quality bearing steel and prevent the loss of technology. During the 20 months 7 from SKF’s announcement of the separation to finalization of the transaction, the stock returned 59% vs. Timken’s return of 10% over the same period.

On January 13, 2011 Marathon Oil (ticker: MRO) announced a plan to separate its refining operations into a separate publicly-traded corporation, Marathon Petroleum (ticker: MPC), allowing the remaining company (ticker: MRO) to focus on exploration and production. The company cited expected benefits of enhanced flexibility to optimally operate each business, improved transparency to the market, and a better ability to attract talent as driving forces behind the separation. Over the six months 8 from the announcement to finalization of the separation, the stock returned 40% compared to only 10% for the S&P 500 Energy Index.

The outperformance often seen after spin-off transactions is generally driven by investor expectations of increased operating performance in the long-term as a result of improved management focus:

“Historically, spinoffs have worked out well. The common thread that runs through all of this is, if you boil it down, the management focus. They go from being unwieldy conglomerates with different businesses competing for capital and management’s attention, to being more focused entities. Often that translates into better financial performance that should work its way into the stock.” 9

Separation should not be disruptive to Timken employees and the Community

There should be no meaningful disruption for the Canton community and Timken’s employees through the separation of the two businesses. The Timken name and Canton headquarters can survive with both companies as independent entities. We also believe that additional employment may be needed to help operate the two companies as independent businesses. In our financial model, we assume corporate costs increase $25M per year as a result of the separation, which includes costs for new employment. We do not advocate or expect any change in employment levels at Timken’s steel or bearings operations.

9 of 15

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs