Timken buys Torrington from IR for $840m
Timken is buying Ingersoll-Rand`s Torrington bearings business to create what will be the world`s third largest bearings company, with annual sales of around $3.6bn. Timken is paying $840m (comprising $700m in cash and $140m in shares) for IR`s "Engineered Solutions" operation, which supplies precision bearings and motion control components and includes the Torrington, Nadella, Kilian, and IRB brands.
"The acquisition of Torrington will position Timken as a global leader in three complementary product and service lines: tapered roller bearings; needle roller bearings; and alloy steels," says James Griffiths, Timken`s president and chief executive. "The addition of Torrington`s higher-margin, customised bearings solutions business will significantly strengthen Timken`s existing automotive segment and will provide Timken with accelerated growth opportunities in a dynamic area for innovation - power train systems."
Timken says that the deal, which it expects to close in the first quarter of 2003, will boost its earnings by at least 10% next year. The deal will strengthen Timken`s presence in Europe and in emerging markets, and will allow it to compete more effectively, not only with established global competitors, but also with growing regional rivals.
Last year, Torrington generated an income of around $1.1bn for IR. It employs around 10,500 people at 27 manufacturing plants and more than 50 offices in the Americas, Europe and Asia. Timken employs about 18,100 people in 24 countries and last year recorded sales of around $2.4bn.
Timken`s managers have drawn up a detailed integration plan and will extend a restructuring programme already underway within Timken to the combined organisation. They expect to achieve savings of around $20m in the first year, rising to $80m by 2005. This is in addition to $80m in annual savings that Timken expects to generate by the end of this year from a manufacturing strategy that it launched in 2001.
The takeover is subject to anti-trust clearance, and successful debt and equity financing. The sale of certain of IR`s French operations, including Nadella where it took control last year, is subject to consultation procedures with French works councils.