Timken says top shareholder's break-up analysis flawed

Industrial conglomerate Timken Co reiterated that it will not split its steel and bearings businesses despite pressure from its top shareholder, and said the investor's analysis of benefits from a break-up had serious flaws.

Activist fund Relational Investors LLC and CalSTRS, a large public pension fund, jointly reported a 6.15 percent stake in Timken in November and said Timken should split into two publicly traded companies.

As of March 21, the investors own a combined 7.28 percent of the company.

Timken said it has reviewed a separation of the company along with its external advisers, and concluded that "maintaining (Timken) in its current integrated state is in the best interests of shareholders at this time."

The investors had said Timken would be worth $68.36 per share on a sum-of-the-parts basis upon separation, according to a regulatory filing. Timken shares closed at $56.58 on Thursday.

Timken said in the regulatory filing the shareholders' analysis does not include the over $200 million in one-time transaction charges, and $60 to $80 million in lost annual synergies.

It also said its steel business, if spun off, would have limited liquidity and not enough financial flexibility to undertake big projects.

Timken called the shareholders' attempts as misguided in their attempt to create "illusory short-term gains through the spin off of the steel business."

It asked its shareholders to vote against their proposal in the shareholder meeting on May 7.

(Reporting by A. Ananthalakshmi in Bangalore; Editing by Maju Samuel)