Timken Co. has filed new information with the Securities and Exchange Commission urging shareholders to reject a proposal to separate the steel and bearings businesses into two companies. Timken also launched a website — www.TimkenDrivesValue.com — challenging the proposal.
The dispute between Timken Co. and a group of its investors accelerated on Monday with both sides contending flawed information is being used to sway shareholders.
Relational Investors and the California State Teachers Retirement Systems are urging shareholders to support a proposal to split Timken’s steel operation off as a separate business. The move would make Timken shares more valuable, the investors claim.
Timken shareholders currently are considering the proposal as they cast proxy votes for the company’s annual meeting on May 7.
Representatives from Relational and CalSTRS are visiting Canton today and expect to meet with Timken officials.
The investors own 7.28 percent of Timken’s shares. Relational, which is privately held asset management firm led by activist shareholder Ralph V. Whitworth, owns the majority of the shares. CalSTRS is a Relational client.
Timken is questioning Relational and CalSTRS claims for splitting the operation. Meanwhile, the investors counter that the company is using “erroneous analysis” as it argues against the split.
On Monday, Timken filed a new presentation opposing the shareholders proposal with the Securities and Exchange Commission.
The company also said it launched a website — www.TimkenDrivesValue.com — with information regarding recommendations from Timken’s directors to vote against the proposal to spin off the steel business.
The Timken website counters one the investors launched two weeks ago, www.UnlockTimken.com.
The company contends its filing highlights the flaws in the CalSTRS and Relational proposal.
“The materials released today are critical to aid Timken shareholders in developing a clear understanding of the flaws in the proposal from CalSTRS and Relational Investors as well as the tremendous value we believe is created by our integrated business model,” the company said in a statement issued Monday.
The company and the shareholders disagree on whether Timken would be more valuable if the company was split.
Timken contends that Relational used only one other company — bearing competitor SKF, which split off its steel business a few years ago — to compare the possible advantages of splitting the steel and bearings businesses. Timken suggests that stock analysts use six comparable companies when making assessments.
Timken also counters the investment groups failed to consider the cost of lost integration benefits the company enjoys because the steel and bearings operations share such things as research and customers.
Whitworth counters that “it is shocking that Timken would underestimate its shareholder’s intelligence by using such erroneous analysis as justification to not unlock value for Timken shareholders. In our numerous conversations with many of Timken’s largest shareholders, there is a consensus view that the company should spin-off the Steel business.”
Page 2 of 2 - The shareholders have urged the split between the steel and bearing business for nearly a year. They made the issue public last fall when they filed for the proxy vote asking the company to hire outside advisors to assess the proposed split.
Timken has said that directors have considered the split with the assistance of outside advisers. The company said its review determined the company would not benefit from spinning off the steel business.
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