NEW YORK (AP) -- Shares of Timken climbed in premarket trading on Friday as it announced plans to split into two publicly traded companies.
Late Thursday, Timken Co. said that its board approved a plan to separate its steel business from its bearings and power transmission business through a spinoff. The bearings and power transmission business will continue to operate under the Timken name, while the new engineered steel company will operate as an independent publicly held company.
The transaction is expected to be completed within a year.
Steve Barger of KeyBanc Capital Markets said in a client note that investors are likely to have a favorable reaction to the news, as they'd been waiting for the company to announce a decision for some time. Timken had formed a strategic committee in June to consider the split of the business. With a decision now made, the uncertainty surrounding the company is gone.
The analyst maintained a "Buy" rating and boosted Timken's price target to $70 from $66.
A representative for Timken did not immediately respond to an email seeking comment.
Timken's stock added $3.24, or 5.4 percent, to $63.50 in premarket trading about 90 minutes before the opening bell. For the year to date, the stock is up 26 percent.