In a regulatory filing, Relational Investors, along with the California State Teachers’ Retirement System, or CalSTRS, confirmed the purchase an aggregate of 5,892,274 shares of Timken (TKR) for $254.3M. Relational and CalSTRS stated the purpose of the transaction is their belief that the market significantly undervalues Timken due to its combination of two incongruent, core businesses and that a spin-off of the Steel business segment from the “Bearings business” would maximize shareholder value. Relational disclosed that in August its representatives met with Timken management and board members to recommend the company hire advisors to effectuate a spin-off of its Steel business into a separately traded public company. Following the disclosure, which had previously been reported by The Wall Street Journal, shares of Timken jumped $4.28, or 10.34%, to $45.69 in mid-afternoon trading.
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