CANTON, Ohio, July 1, 2011 /PRNewswire-FirstCall/ -- Timken (NYSE: TKR) today announced the completion of its $200 million purchase of Philadelphia Gear, a leading provider of gear-drive systems and aftermarket services for the industrial and military marine sectors.
"The Philadelphia Gear acquisition advances our strategy to diversify Timken's portfolio well beyond bearings and assist customers with broader mechanical power transmission services," said James W. Griffith, president and chief executive officer of The Timken Company. "We are delighted to welcome Philadelphia Gear's employees and its excellent brand and reputation to the Timken family."
Philadelphia Gear had trailing 12-month sales through March 2011 of approximately $85 million and recently was awarded an $80 million contract to supply main reduction gears to the U.S. Navy. In addition to military marine applications, the business provides proprietary knowledge of premium gear drives, replacement products and services for growing energy and infrastructure markets.
Based in King of Prussia, Penn., Philadelphia Gear brings further expertise in mechanical power systems, including five technical service centers located across the United States and six international sales offices. While the business currently has 220 employees, Timken and Philadelphia Gear's management team plan to establish additional locations to expand the services model globally.
Through the acquisition of substantially all of Philadelphia Gear's assets by Timken's wholly owned subsidiary, Timken Gears & Services Inc., the new gear services business becomes part of Timken's Process Industries segment. The company expects the addition to be accretive to Timken earnings in the first full year and to generate income exceeding the cost of capital within three years (by 2014).
"Philadelphia Gear and Timken make a powerful combination to deliver broader capabilities and value to our customers, while generating new opportunities for profitable growth," said Chris Coughlin, president of Timken's Process Industries segment. Coughlin named Carl Rapp, current president of Philadelphia Gear Corp., to lead Timken Gears and Services Inc., leveraging the best capabilities of each organization globally. "With Timken, we have the opportunity to build on a broader global platform to expand our services around the world," said Rapp. "That's good for our customers and employees."
Deloitte and Jones Day served as advisors to Timken in this transaction.
About Philadelphia Gear
Founded in 1892 to serve the steel and coal industries, Philadelphia Gear thrived under the ownership of the Ball family for more than 90 years. The business has grown and evolved to become a premier global manufacturer and service provider of gear drives, drive components, inspection and repair services, as well as on-site technical services.
About The Timken Company
The Timken Company (NYSE: TKR; www.timken.com) keeps the world turning with innovative friction management and power transmission products and services that are critical to help hard-working machinery perform efficiently and reliably. With sales of $4.1 billion in 2010 and 20,000 people operating from locations in 29 countries, Timken is Where You Turn® for better performance.
Certain statements in this news release (including statements regarding the company's expectations) that are not historical in nature are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, the statements related to expectations regarding accretion, exceeding cost of capital, prospects for growth, and expansion of capabilities are forward-looking. The company cautions that actual results may differ materially from those projected or implied in forward-looking statements due to a variety of important factors, including: the inability to successfully integrate the Philadelphia Gear business into the company's operations or achieve the expected synergies associated with the acquisition; unanticipated downturns in our business relationships with our customers; competitive pressures on our sales and pricing; or adverse changes in the general economy or the markets served by Philadelphia Gear. Additional factors are discussed in the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. The company undertakes no obligation to update or revise any forward-looking statement.
SOURCE The Timken Company