Relational Investors investment in Timken Company in 2013

Relational Investor invested in Timken Company in 2013 and made public a presentation for it. If you are interested to learn about how hedge funds write presentations, here is one for you to learn from.

About the Relational Investor deck

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About the deal

In 2013, Relational Investors, an activist investment firm, alongside the California State Teachers’ Retirement System (CalSTRS), initiated a significant investment in Timken Company, a manufacturer specializing in bearings, alloys, and other related engineering products. Their strategy focused on advocating for a split of Timken into two separate publicly traded companies, one for its steel business and another for its bearings and power transmission business. They argued that such a separation would unlock shareholder value by allowing the market to appropriately value the two distinct businesses, which they believed were undervalued as a combined entity.

After a prolonged campaign, including engaging with other shareholders and presenting detailed analyses to support their case, Relational Investors and CalSTRS succeeded in convincing a majority of Timken’s shareholders. In a shareholder vote, a significant majority supported the proposal for a split. Despite initial resistance, Timken’s management eventually agreed to the separation, leading to the creation of TimkenSteel Corporation for the steel business and leaving the original company focused on bearings and power transmission.

This investment and subsequent corporate action are often cited as a textbook case of successful activist investing, where engagement and strategic proposals by investors led to a reevaluation of corporate structure and strategy, purportedly unlocking value for shareholders.

About Relational Investor

Relational Investors LLC, established by Ralph V. Whitworth in 1996, has left an indelible mark on the landscape of financial activism. With a focused investment approach targeting undervalued companies with strong fundamentals, Relational has consistently sought to unlock shareholder value through active engagement with management. By leveraging its sizable stake in target companies, often ranging from $100 million to significant equity positions, Relational employs a multi-faceted strategy involving dialogue, proposal presentations, and, if necessary, public advocacy to drive strategic changes.

Through its proactive stance on governance and strategic decision-making, Relational has not only delivered positive returns for its investors but has also influenced broader market practices. By championing initiatives such as large buybacks and dividends, Relational has reshaped corporate behavior and investor expectations. Even though the firm ceased its active business affairs in 2015, its legacy endures, serving as a testament to the enduring impact of shareholder activism in shaping corporate governance and maximizing shareholder value in the financial world.

About Timken Company

The Timken Company is a leading global manufacturer of engineered bearings and power transmission products, headquartered in North Canton, Ohio, United States. Founded in 1899 by Henry Timken, the company has a long history of innovation and excellence in the manufacturing industry. Timken’s product portfolio includes a wide range of bearings, gear drives, belts, chains, lubrication systems, and related components used in various industries, including aerospace, automotive, industrial, and energy. The company’s products are known for their quality, reliability, and performance, and are used in critical applications where precision and durability are essential. Timken also offers engineering and technical support services to help customers optimize their equipment and improve operational efficiency. With a global network of manufacturing facilities, distribution centers, and sales offices, Timken serves customers worldwide, providing them with solutions to meet their most demanding application requirements. Through a commitment to innovation, customer satisfaction, and continuous improvement, Timken continues to be a trusted partner for industries seeking high-quality bearings and power transmission products.

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