Relational Investment is an “activist” investor:  the San Diego firm pushes companies it has a stake in to improve share value. It holds close to 6 % of Timken’s stock and has a proposal for the company’s next annual meeting: “Sell the steel division.” 

A third of Timken’s roughly $5-billion yearly revenue comes from steel, which it began producing in 1916 in Canton. It’s actually been headquartered there and Canton has been the home of the Timken family since 1901.  

Eli Lustgarten is a nationally published analyst with Longbow Research. “Relational Investors are known for being creative and suggesting intuitive changes.  But the idea of Timken splitting up the company into a bearing & transmission and steel business is actually not new and has been talked about for several years.”

And, Lustgarten says, because Timken’s precision-steel supplies both its own and other high-end manufacturing, spinning-off steel might not do what Relational thinks it would.  “Timken is not just a bearing company and a steel company.  It’s a motion solution company.  And its steel business is a specialty steel business.  So it’s nice that you get activists suggesting how to improve the stock price.  But, in this case, we think this is more of a short-term event, and not necessarily in the best interest of Timken shareholders.” 

Splitting-up one of northeast Ohio’s major international corporations would be huge news in the region; but Lustgartner says…“Odds are, because this is not a new concept that hasn’t been looked at, it will be just a recommendation.  So, I suspect not much will happen.  It’s not a business easily separated, nor makes a lot of sense to be separated.