Timken Case Essay

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and Torrington Deal The PARTIES • Global manufacturer of highly engineered bearings, alloy, specialty steel and related components supporting diversified markets worldwide • 3 operating segments: Automotive Group, Industrial Group and Steel Group • Asset size $2.7B • Revenues of $2.55B • Global diversified manufacturer of industrial and commercial equipment and components • 4 operating segments: Climate Control Segment, Infrastructure Segment, Security and Safety Segment, Industrial Solutions Segment • Asset size of $10.8B • Revenues of $8.95B CONTEXT Bearings are a key component of all moving parts and is thus a critical supplier of the following industries: • • • • • • • • Automotive Aerospace Construction Off-Highway Railroad Medical Instruments Machine Tools Energy • EXPECTED FLAT TO MODERATE GROWTH OF US MARKET 3-5% • GLOBAL GROWTH EXPECTED AT 6.5% ANNUALLY THROUGH 2005 OPPORTUNITIES Ingersoll Rand divestment of Torrington, which is part of its Engineered Solutions segment under Industrial Solutions Divestment of Torrington will free up capital to allocate to other business lines with higher growth potential OPPORTUNITIES Tapered roller bearings and Precision-steel components STEEL AUTOMOTIVE INDUSTRIAL Torrington Needle-bearing solutions AUTOMOTIVE INDUSTRIAL OPPORTUNITIES STRATEGIC FIT • Complementary operations and product offerings (only 5% overlap in product offering and 80% common customer base) – bundling opportunities and margin improvement • Synergies and value creation • Opportunity to capture bigger share of market (from 7 to 11%) and increase global reach to become the 3rd largest producer of bearing worldwide SYNERGIES Core competencies Product Development Production Sourcing Marketing and International Distribution Network Cross-selling opportunities VALUATION Stand alone equity
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