Investors LLC and the California State Teachers
Retirement System, which together own 7.31 percent of Timken
Co.s shares, are again asking the company to separate its
steel and bearings businesses.
Relational analyzed such a
proposal last year and presented it to Timken (
amm.com, Dec. 3).
In a Feb. 19 letter to Timken
chairman Ward J. Timken Jr., San Diego-based Relational and the
teachers pension fund reiterated their analysis and
excerpted third-party reports that they say demonstrate broad
investment-community support for spinning off the steel
business. Relational urged the board not to "continue to allow
management to obstinately take the position that a spinoff of
the steel business is not in the best interest of shareholders
... without providing any credible rationale."
Timkens board "continue(s)
to act in the best interests of shareholders," the Canton,
Ohio-based company said in an e-mail. "We engage with
shareholders regularly and have met twice with representatives
of Relational to share our perspective on their proposal."
Company leaders and third-party
advisors have considered separating the steel and bearings
businesses, the company said, but found "significant cost,
technology and revenue synergies between (the divisions) as
well as diversification benefits in continuing to operate under
its current structure."
The loss of such benefits, alongside a potential reduction
in financial flexibility, "would largely offset any near-term
valuation increase that might result from a separation of the
businesses at this time," Timken said.