LOS ANGELES Greenbrier
Cos. will sell its Kentucky roller bearings operation to Timken
Co. and enter a long-term supply agreement with Timken for rail
car wheel bearings.
The Lake Oswego, Ore.-based rail
car and barge builder said it will sell substantially all the
equipment used in its reconditioned wheelset roller bearings
operation in Elizabethtown, Ky., to Timken. Under the supply
agreement, the Canton, Ohio-based steel and bearings producer
will supply Greenbrier with reconditioned and new bearings.
The financial terms of the deal,
which is expected to close by the end of Greenbriers
fiscal third quarter ending May 31, were not disclosed.
While the Elizabethtown
operation is profitable, recent regulations related to
reconditioned components and "a constrained availability" of
certain key materials have "diminished the strategic value" of
the plant, according to Greenbrier.
The company said Timkens
role as a global bearings manufacturer with four U.S. rail
bearing reconditioning facilities "brings scale and experience"
to the agreement, ensuring Greenbrier a "steady, long-term
supply" of bearings while eliminating Greenbriers cost of
maintaining its own operation, freeing up about $10 million in
Greenbrier said the move is
consistent with the companys strategy of reducing noncore
"With the completion of this
transaction, we are well positioned to focus on our core
strengths of heavy rail car repair, refurbishment, complete
wheel services and routine rail car maintenance and pursue the
growth opportunities that these areas offer," Greenbrier Rail
Services president Timothy A. Stuckey said in a statement.
Brian Ruel, vice president of
off-highway, light vehicle systems and rail for Timken, said in
a statement that the agreement "aligns with our strategy to
grow our service portfolio and invest in the rail
The deal does not include
Greenbriers Elizabethtown roller bearings plant, which
was acquired in 2008 and will be sold after the transition.
A Greenbrier executive
couldnt be reached for further comment.
Both companies have been under
pressure from outside investors. Greenbrier late last year
fended off a $597-million takeover attempt by American Railcar
Industries Inc., controlled by billionaire investor Carl Icahn
amm.com, Dec. 28), while some investors in Timken
have been urging the company to separate its steel and bearings
amm.com, Feb. 19).