The Timken Company TKR has inked a deal with EnPro Industries NPO to acquire the latter’s surface-engineering solutions business GGB Bearing Technology ("GGB") for $305 million cash. GGB boasts a portfolio of metal polymer bearings, serving a wide range of industries. Its expertise in plain bearing coatings complements TKR’s portfolio of roller and ball bearings. The deal is expected to close in the fourth quarter of 2022 and will be accretive to earnings in the first full quarter after closing.
Founded in 1899, GGB has manufacturing facilities across the United States, Europe and China, and has a global engineering, distribution and sales footprint. From Polymer Coatings and Metal-Polymer bearings to Fiber Reinforced Composite bearings and self-aligning, shaft-bearing assemblies, its solutions are specifically designed to reduce friction, and optimize performance and durability. Its surface engineered solutions cater to a wide range of customers, including aerospace, agricultural, automotive, construction, industrial, medical and mining to name a few. GGB’s revenues are expected to be around $200 million in fiscal 2022.
GGB’s product portfolio complements Timken’s industry-leading, engineered-bearing solutions. This acquisition provides strong synergies and expands Timken’s business by adding products with a solid growth outlook. GGB's portfolio of metal-polymer bearings will enhance TKR's ability to provide the best solution to customers' most challenging friction management applications.
Timken will fund the transaction with cash on hand and its existing revolving credit facility. The deal is subject to customary closing conditions.
Over the past few years, Timken has been pursuing strategic acquisitions to broaden its portfolio and capabilities across diverse markets, focusing on bearings, adjacent power transmission products and related services. In 2018, TKR acquired Rollon, Cone Drive and ABC Bearings. In 2019, it acquired BEKA Lubrication and the Diamond Chain Company.
The addition of BEKA Lubrication strengthened TKR’s global leadership in the automatic lubrication systems market sector, while Diamond Chain’s acquisition augmented its leadership in high-performance roller chains for the industrial markets. In November 2020, Timken purchased all assets of the Aurora Bearing Company that expanded its offerings in the engineered-bearings space.
Last year, Timken completed the acquisition of Intelligent Machine Solutions (iMS), expanding its linear motion product line with a specific focus on factory automation. In May 2021, Timken acquired Spinea that bolstered its position in the growing automation sector.
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In the past year, shares of Timken have lost 7.9% compared with the industry’s fall of 20.4%.
Zacks Rank and Other Stocks to Consider
Timken currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some other top-ranked stocks in the Industrial Products sector are RBC Bearings ROLL and Greif Inc. GEF. While ROLL flaunts a Zacks Rank #1, GEF carries a Zacks Rank of 2 at present.
RBC Bearings has an expected earnings growth rate of 77% for fiscal 2023. The Zacks Consensus Estimate for the current year’s earnings has moved up 22% in the past 60 days.
RBC Bearings has a trailing four-quarter earnings surprise of 9.4%, on average. ROLL’s shares have increased 10% in the past year.
Greif has an estimated earnings growth rate of 43% for the current fiscal year. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised 5% upward.
Greif pulled off a trailing four-quarter earnings surprise of 22.4%, on average. GEF’s shares have gained 3% in the past year.
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