CalSTRS Proposal to Split Timken Approved by Shareholders
Shareholders understand the added value of the businesses as separate companies.
WEST SACRAMENTO, CA – Shareholders today voted 53 percent to support the California State Teachers’ Retirement System (CalSTRS) proposal to split The Timken Company into separate steel and ball bearing businesses. The move will unlock greater shareholder value, CalSTRS officials announced at the annual shareholder meeting in Canton, Ohio.
CalSTRS Director of Corporate Governance Anne Sheehan issued the following statement regarding today’s actions:
“CalSTRS appreciates the confidence our fellow shareholders have placed in our analysis of the optimal corporate structure for the company, but as importantly, we expect the board to heed shareholders’ wishes and move expeditiously toward the split. Two-thirds of independent shareholders voted with the CalSTRS proposal.
“Timken is an excellent, well-managed business, but due to its current conglomerate structure, its full value is unrecognized by the market. While historically there were good reasons for combining the steel and ball bearings businesses, this is no longer the case. Since November 28, 2012, the date of the proposal’s announcement, Timken stock has risen nearly 32 percent with a potential to rise another 30 percent after the split. That is an additional estimated $1 billion of value for shareholders.
“The split we proposed can and should be executed without negative impact on employment or on the Canton community. The two companies should preserve the Timken name, remain headquartered in Canton and continue to have Timken family members serve on both boards.”
CalSTRS has held Timken shares for more than 20 years and currently holds nearly 400,000 shares which, together with those of Relational Investors LLC, account for 7.3 percent of outstanding shares. CalSTRS is a long-term shareholder and is expected to remain invested in the company for the foreseeable future.
The California State Teachers’ Retirement System, with a portfolio valued at $163.7 billion as of March 31, 2013, is the largest educator-only pension fund in the world. CalSTRS administers a hybrid retirement system, consisting of traditional defined benefit, cash balance and voluntary defined contribution plans. CalSTRS also provides disability and survivor benefits. For 100 years, CalSTRS has served California’s public school educators and their families, who today number 862,000 from the state’s 1,600 school districts, county offices of education and community college districts.