Services leader in gear drives, components and engineering for energy, infrastructure, industrial and marine applications
Significantly expands Timken capabilities in the global industrial services market
Expected accretion to Timken earnings in 2012; exceeding cost of capital in 2014
CANTON, Ohio: May 27, 2011 —The Timken Company (NYSE: TKR) today announced an agreement to acquire the assets of Philadelphia Gear Corp., a leading provider of high-performance gear drives and components with a strong focus on value-added aftermarket capabilities in the industrial and military marine sectors.
Based in King of Prussia, Penn., Philadelphia Gear had trailing 12-month sales through March 2011 of approximately $85 million. The acquisition brings proprietary power-transmission knowledge of premium gear drives, replacement products and services for growing markets including energy and infrastructure. The business also is a provider of products and services for military marine applications, including a recently awarded $80 million contract to provide main reduction gears for the U. S. Navy.
The addition of Philadelphia Gear to Timken's Process Industries segment significantly expands the range of industrial services capabilities for both companies to offer their customers. The acquisition advances Timken's strategy to offer comprehensive services and solutions to end-users that enhance the performance and productivity of their mission-critical mechanical applications.
"Philadelphia Gear is an excellent fit with Timken," said Chris Coughlin, president of Timken's Process Industries segment. "Like Timken, it is a leader in industrial services providing highly engineered solutions and replacement components for mechanical power transmission equipment. It will strengthen our presence precisely in the areas we've targeted, with excellent prospects for profitable growth via extension to our customer base around the world."
Timken plans to combine Philadelphia Gear, which employs approximately 220, with its Industrial Services business to leverage the best capabilities of each organization across the global markets. Coughlin noted that Timken plans to expand the business with the existing management team. "The synergies in this combination are all about growth," he said.
Timken expects Philadelphia Gear to be accretive to earnings in its first full year and to generate income exceeding the cost of capital by 2014. The company plans to complete the acquisition through its Timken Gears & Services Inc. subsidiary by the third quarter of 2011, pending certain government and regulatory approvals.
About Philadelphia Gear Corp.
Founded in 1892 to serve the steel and coal industries, Philadelphia Gear Corp. has been privately held since 1920. The company 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 the accretion, exceeding cost of capital, and timing of the acquisition are forward-looking. The Timken 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 complete the acquisition due to either the failure to satisfy any condition to the closing of the transaction, including receipt of regulatory approval, or the occurrence of any event, change or other circumstance that could give rise to the termination of the purchase agreement; the risks associated with the integration of acquired businesses; and adverse changes in the markets served by Philadelphia Gear. These and additional factors are described in greater detail in the company's Annual Report on Form 10-K for the year ended Dec. 31, 2010 on page 44. The company undertakes no obligation to update or revise any forward-looking statement.