Shares of steel products maker Timken Co. (TKR) continued their ascent Friday, climbing as much as 5% in morning trading.
Its stock surged 7% the prior two days amid speculation it might split into two publicly traded companies, and increase its dividend. Timken late Thursday said its board approved a plan to separate its steel business from the unit that makes bearings and power transmissions.
The announcement lifted others in the ailing steel producers group.
Timken
had been under pressure from activist investors, including the
Relational Investors fund, who had pressed it to make the move.
Relational has taken positions in several large manufacturers in recent years, including ITT (ITT), Ingersoll-Rand (IR) and Illinois Tool Works (ITW), and advocated changes to make the companies more profitable and lift share price.
Relational was supported in its drive by CalSTRS, the California state teachers' pension fund, which joined in urging Timken management to make changes.
Timken shares were up 3.3% in afternoon trading on the stock market today.
The company had struggled of late, reporting lower year-over-year profit five quarters in a row, and lower sales growth for four quarters.
Still, its stock price rose 63% from a Nov. 16 low to Aug. 5 on prospects of better growth amid a manufacturing resurgence tied to the economy. It's consolidated since, in sync with the market.
Elsewhere in the Metal Processors & Fabricators group, ranked a weak 99 on IBD's list of 197 industries, Valmont Industries (VMI), with annual revenue of about $3.3 billion, edged up.
Smaller but highly rated Handy & Harman (HNH), with sales of $626 million a year, was up 1.4%. Handy & Harman boasts an 89 IBD Composite Rating, meaning its stock has outperformed 89% of all stocks on key metrics such as sales and profit growth.
In the related Steel-Producers group, ranked a dismal 158 on IBD's industries list, Netherlands-based Arcelor-Mittal (MT), the world's largest steel producer with $80 billion yearly revenue, rose 1%. And smaller Valley City, Ohio-based Shiloh Industries (SHLO), with an 83 Composite Rating, was also up about 1%.
Timken plans to spin off the bearings and transmissions business as a $3.4 billion revenue global company, and named Richard Kyle, current chief operating officer of that unit, as CEO. That company will start with 17,000 employees and 35 manufacturing plants.
The new engineered steel company will start with about $1.7 billion annual revenue and be headed by Ward Timken, currently president of the steel business and chairman of Timken's board.
Timken expects to complete the split within 12 months.
Its stock surged 7% the prior two days amid speculation it might split into two publicly traded companies, and increase its dividend. Timken late Thursday said its board approved a plan to separate its steel business from the unit that makes bearings and power transmissions.
The announcement lifted others in the ailing steel producers group.
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Relational has taken positions in several large manufacturers in recent years, including ITT (ITT), Ingersoll-Rand (IR) and Illinois Tool Works (ITW), and advocated changes to make the companies more profitable and lift share price.
Relational was supported in its drive by CalSTRS, the California state teachers' pension fund, which joined in urging Timken management to make changes.
Timken shares were up 3.3% in afternoon trading on the stock market today.
The company had struggled of late, reporting lower year-over-year profit five quarters in a row, and lower sales growth for four quarters.
Still, its stock price rose 63% from a Nov. 16 low to Aug. 5 on prospects of better growth amid a manufacturing resurgence tied to the economy. It's consolidated since, in sync with the market.
Elsewhere in the Metal Processors & Fabricators group, ranked a weak 99 on IBD's list of 197 industries, Valmont Industries (VMI), with annual revenue of about $3.3 billion, edged up.
Smaller but highly rated Handy & Harman (HNH), with sales of $626 million a year, was up 1.4%. Handy & Harman boasts an 89 IBD Composite Rating, meaning its stock has outperformed 89% of all stocks on key metrics such as sales and profit growth.
In the related Steel-Producers group, ranked a dismal 158 on IBD's industries list, Netherlands-based Arcelor-Mittal (MT), the world's largest steel producer with $80 billion yearly revenue, rose 1%. And smaller Valley City, Ohio-based Shiloh Industries (SHLO), with an 83 Composite Rating, was also up about 1%.
Timken plans to spin off the bearings and transmissions business as a $3.4 billion revenue global company, and named Richard Kyle, current chief operating officer of that unit, as CEO. That company will start with 17,000 employees and 35 manufacturing plants.
The new engineered steel company will start with about $1.7 billion annual revenue and be headed by Ward Timken, currently president of the steel business and chairman of Timken's board.
Timken expects to complete the split within 12 months.