The Timken Co. said its board of directors has approved a plan to separate the company's steel business from its bearings and power-transmission business through a spinoff, creating two publicly traded companies.
Under the plan, the steel unit will operate as an independent publicly held company with estimated annual revenue of $1.7 billion.
The bearings and power-transmission business will continue to operate as the Timken Co., with estimated annual revenue of $3.4 billion.
Canton, Ohio-based Timken expects to complete the transaction within 12 months.
James Griffith, 59, will continue as president and CEO until the separation is complete, at which time he plans to retire after 30 years of service.
The board of directors plans to name Richard Kyle as Griffith's successor.
The board also plans to name Ward "Tim" Timken Jr. to lead the new engineered-steel company as its chairman and CEO. Currently, Ward Timken is the company's chairman of the board.
"Timken has a long and successful history of creating value for its shareholders," Griffith said in a news release.
"Over the past several years, we have transformed the business and delivered superior financial performance by diversifying and expanding customer markets and product lines, making strategic, accretive acquisitions and introducing new capabilities around the world. We see this initiative - to build out two strong, focused companies – as further evidence of our commitment to drive value for our shareholders and our customers."
Griffith noted that the two standalone companies will continue to pursue their distinct growth strategies within their respective core markets, which is expected to further improve competitiveness.
"[The] decision is the appropriate 'next step' to build on the momentum created by our improvement in the performance and underlying fundamentals of each of our core businesses," Ward Timken said. "These are two winning businesses and we are confident that both can sustain the market-leading performance they have achieved over the past few years."
Kyle, 47, joined the company in 2006 with extensive industry experience and has held executive positions at Timken that include vice president of manufacturing, president of aerospace and mobile industries, and, most recently, group president.
Until the spinoff is complete, Kyle has been named chief operating officer of the bearings and power-transmission business.
Timken, 46, has been with the company since 1992, when he was a senior steel-business analyst. In 2004, he was named president of the steel business, and he was elected chairman of the board in 2005.
Timken will continue to serve as chairman as well as oversee the steel business until the separation.
Headquartered in Canton, the engineered-steel company will include approximately 3,000 associates, seven manufacturing plants, four warehouses and five sales offices.
The steelmaker manufactures carbon, micro-alloy and alloy steels, with annual melt capacity of more than 1.8 million tons.
Timken Co.'s bearings and power-transmission business will employ nearly 17,000 people at 35 manufacturing plants, 25 service and repair facilities, four technology centers and an extensive network of sales offices and warehouses around the world.