Ralph Whitworth’s Relational Investors LLC won Timken Co. (TKR:US) shareholders’ support in a nonbinding vote urging management to spin off the company’s steel unit from its larger ball-bearing business.
Directors will evaluate the results and announce steps within 45 days, Chairman Ward J. Timken said in a statement today. The plan won support of 53 percent of shareholder votes cast at Timken’s annual meeting. For all outstanding shares, 47 percent favored the proposal and 41 percent opposed it.
“The board must now acquiesce to the will of the shareholders consistent with their fiduciary duties,” according to a statement from Relational and California State Teachers’ Retirement System, which together own 7.3 percent of Canton, Ohio-based Timken.
Relational and Calstrs, as the pension fund is known, have been lobbying for a breakup since November on the grounds that it would boost shareholder value. The board argued that a spinoff would boost expenses, reduce efficiency and inflate borrowing costs for an independent steel operation.
“We appreciate the thoughtful feedback we’ve received from our shareholders on the spinoff proposal,” Ward Timken said in the company’s statement.
Timken rose 2.9 percent to $56.21 at 11:07 a.m. in New York. The shares jumped 32 percent through yesterday (TKR:US) since Nov. 27, the day before Relational and Calstrs disclosed their stakes and described the breakup proposal.
Whitworth has used his holdings to push for change at companies such as Illinois Tool Works Inc. (ITW:US), which sold a majority stake in its decorative surfaces unit last year and said in February it’s studying the sale of its packaging business.
To contact the reporter on this story: Thomas Black in Dallas at firstname.lastname@example.org
To contact the editor responsible for this story: Ed Dufner at email@example.com