On Thursday, the board of the Timken Company (NYSE:TKR) agreed to spin off its steel business from its industrial bearings operations following pressure from two large shareholders. The decision came after a non-binding vote by investors this summer supporting this kind of move.
The proposal was led by the California State Teachers' Retirement System and Relational Investors, a hedge fund led by Ralph V. Whitworth. At its annual meeting, Timken said that it would consider the matter. Timken had argued that the company was better off staying together, but two investors said that a division would create more value for fellow shareholders.
The proposed split is expected to be completed within 12 months. Under the terms of the split, Timken will spin off its engineered steel arm to create a new publicly traded company with around $1.7 billion in annual sales. The rest of the business will keep the Timken name, and will have an estimated annual revenue of $3.4 billion.