CANTON, Ohio – The Timken Co. has issued a statement in response to the Schedule 13D filed yesterday by California State Teachers’ Retirement System (CalSTRS) and Relational Investors LLC with the U.S. Securities and Exchange Commission. In the filing, CalSTRS and Relational disclosed that their group owns 6.15 percent of Timken shares and urged the company to spin off its steel business into a separate company.
 
"Timken is always open to constructive input from shareholders and has had meetings with Relational to listen to their views," said James Griffith, president and CEO of The Timken Co. "The Board and our management team regularly evaluate the optimal allocation of capital to generate shareholder value, including capital expenditures, pension funding, acquisitions, divestitures and returning capital to shareholders in the form of dividends and share repurchases. As part of this process, over the years we have carefully evaluated separating the steel and bearing businesses. This includes a thorough review with our board this summer of Relational’s proposal, with input from outside financial advisors.
 
"As a market leader in high-quality engineered steel products, our steel business leverages the same expertise and know-how that we apply across our businesses. We have significant technology, cost and revenue synergies between our bearing and steel businesses as well as diversification benefits in continuing to operate under our current structure," Griffith continued. "These synergies and benefits, coupled with a potential reduction in financial flexibility, among other factors, led the board to conclude that the separation of the businesses at this time would not be in the best interests of Timken shareholders."
 
According to a report from the Wall Street Journal, Timken shares closed up 12 percent on the NYSE yesterday, following these events.