CalSTRS and Relational Investors reaffirmed the CalSTRS proposal to split Timken Co. into two parts in an effort to bolster shareholder value after a meeting Tuesday with representatives of the company's board and management failed to produce any accommodation, according to a joint statement by the investors.
The $161.5 billion California State Teachers' Retirement System, West Sacramento, and Relational collectively own 7.28% of Timken's shares, including 0.41% owned by CalSTRS, according to statements from the investors and the company. Together the investors are the second-largest holder of Timken shares after the 10% owned by the Timken family. The Timken Co. Savings and Investment Pension Plan, Canton, Ohio, is the third-largest holder with 6.4% of the shares. The plan had $1.1 billion in assets, including $299.6 million in Timken stock, as of Dec. 31, 2011, according to its Form 5500 filing.
Anne Sheehan, director of corporate governance at CalSTRS, said in the joint statement: “From the outset, we have tried to work with the board to unlock the company's inherent value for all shareholders through the separate public trading of Timken's steel and bearings businesses. It is clear that there is consensus in the investment community supporting this initiative based on published analyst reports, calls with the company's investors and Timken's stock price. Nevertheless, the board has consistently turned a blind eye to what the marketplace is saying.”
CalSTRS and Relational in a joint filing with the Securities and Exchange Commission contend the value of the company would be $68.36 a share, if the proposal is carried out. That's up from Wednesday's midday price of $53.06.
Timken in a letter to shareholders called for the rejection of the proposal, saying, “our integrated platform and comprehensive strategic plan (is essential to) drive value for shareholders,” while the CalSTRS and Relational analysis of a spinoff has flaws.
The company's annual meeting is May 7.