...Timken Company Case Student’s Name Institution The Timken Company Case 1. How does Torrington fit with the Timken Company? What are the expected synergies? There are many ways in which Torrington fits with the Timken Company. Firstly, it is apparent that both companies understand the problems of their businesses and industry. This is because they both do business in the automotive and industrial bearings market. This means that the management will not change significantly. Instead, it will get reinforced. The fact that the acquisition will facilitate reconciliation of management styles and also accounting standards means that they fit each other. In fact it can be said that some of the reasons for acquisition include, but are not limited to acquiring new managerial skills, achieving economies of scale, increase return on investment. 2. What is your stand alone valuation of Torrington? It should be noted that the greatest challenge in valuation is estimating the potential value of synergies which should necessarily be the result of increase in cash flows. For the case of Torrington, what is needed is to make incremental investments planning. This entails determining the hidden cost which are bound to bring overvaluation of the target. Such overvaluation can lead to value destructions and not value creation. The case tends to support the fact that acquisition is worthwhile in some elements while opposing the acquisition in other elements. The first valuation index supporting...
Words: 892 - Pages: 4
...The Timken Company – a leader in the bearing industry, is considering acquiring the Torrington Company. Torrington Company, a leading manufacturer of needle roller bearings which is an engineering solution segment from Ingersoll-Rand. Both companies operate and compete in same business and therefore, Timken is seeking substantial operating synergies from this largest acquisition of its history. With this acquisition, Timken is increasing the size of company by almost 50 percent. And, Timken will continue to concentrate on what it do best by buying a company in an industry, where it has a leadership position built on decades of expertise. Timken expects to expand its worldwide business base with new products and services as both companies have only 5 percent overlap in their product offerings. Timken will also be able to broaden its technology and engineering capabilities to enable it to deliver more value to customers around the globe; the two companies’ customer list overlaps by 80 percent. Thus it was expected that the combined companies would be able to create more value for customers with a more complete product line and, eventually more effective new-product development. Timken will move quickly to integrate Torrington into its global automotive and industrial business structures and expects to achieve estimated annualized savings of $80 million by the end of 2007. These savings are expected to come from economies of scale; consolidating purchasing activities and distribution...
Words: 1701 - Pages: 7
...In 2002, the Timken Company was considering acquiring the Torrington Company from Ingersoll-Rand. The acquisition would make a clear statement to the market about Timken’s commitment to remain a worldwide leader in the bearing industry by combining more than 100 years of bearing manufacturing and development experience. Because the two companies shared many of the same customers but had few products in common, customers would surely appreciate that Timken’s sales representatives could meet more of their needs. Timken’s potential annual cost savings from consolidating manufacturing facilities and processes were estimated to be more than $80 million. If the price paid for Torrington were too high, Ingersoll-Rand, rather than Timken, would capture the value of the synergies. In addition, given the large size of the acquisition, Timken was concerned about the impact on its balance sheet. If Ingersoll-Rand demanded a cash deal and if Timken raised the money with new debt, the increased leverage would almost certainly prompt credit agencies to downgrade Timken’s investment-grade rating. The Bearing Industry Bearings of various sizes and specifications found their way into everything from space shuttles to household appliances, automobiles, dentist drills, roller skates, and computer disk drives. In 2001, U.S. establishments involved in ball- and roller-bearing manufacturing employed more than 33,000 workers. The bearing industry was facing a variety of complex problems. Policies...
Words: 4307 - Pages: 18
...The company was founded by Henry Timken in St. Louis, Missouri in 1899 and incorporated as The Timken Roller Bearing Axle Company. A year earlier, in 1898, Timken got a patent for the tapered roller bearing for which the company would become known. At the time, Timken was a carriage-maker in St. Louis and held three patents for carriage springs. However, it was his patent for tapered roller bearings that allowed his company to become successful. Tapered roller bearings were a breakthrough at the end of the 19th century because bearings used in wheel axles had not changed much since ancient times. They relied on bearings enclosed in a case that held lubricants. These were called "friction bearings" and depended on lubricants to function. Without proper lubrication, these bearings would fail due to excessive heat caused by friction. Timken was able to significantly reduce the friction on his bearings by using a "cup" and "cone" design incorporating tapered bearings which actually rolled, which reduced the load placed on the bearings by distributing the weight and load evenly across the cups, cones, and bearings. The company moved to Canton, Ohio in 1901 as the automobile industry began to overtake the carriage industry. Timken chose this location because of its proximity to the American car manufacturing centers of Detroit, Michigan and Cleveland, Ohio, and because it was close to the American steel-making centers of Pittsburgh, Pennsylvania and Cleveland. Ray Harroun,...
Words: 564 - Pages: 3
...Jun.25th 2014 Background Timken Company Overview Founded in 1898 by Henry Timken and incorporated in 1904, The Timken Company (“Timken” or “the company”), is headquartered in Canton, Ohio. Timken is the largest manufacturer of tapered roller bearings and alloy seamless mechanical steel tubing in the United States and a leading global manufacturer of highly-engineered bearings, alloy and specialty steels, and a provider of related products and services. Timken is the largest North American-based bearings manufacturer. The company has operations in 29 countries on six continents. As of December 31, 2005, Timken employed approximately 27,000 people. On February 18, 2003, Timken completed the acquisition of The Torrington Company (Torrington), a manufacturer of needle bearings used in transmission and wheel applications. Torrington is now integrated into the company, and has added tremendous scale to Timken’s operations. Torrington Company Overview Founded in 1866 as Excelsior Needle Company, a maker of sewing-machine needles, The Torrington Company was an old-line industrial firm. Torrington operated its business in two segments that were familiar to Timken: automotive and industrial. Sales were approximately equal across the two segments. The OEM business focused on higher-margin niche products. Torrington’s 2002 sales were split as follows: 73% in North America, 17% in Europe, and 10% elsewhere. The company employed 10,500 workers at 27 plants worldwide, and served...
Words: 1897 - Pages: 8
...Latar Belakang Tahun 2002, perusahaan Timken berkeinginan untuk mengakuisisi perusahaan Torrington dari Ingersoll-Rand. Tujuan dari akuisisi ini adalah untuk menekankan ke pasar tentang komitmen Timken sebagai pemimpin dalam industry bantalan dengan pengalaman lebih dari 100 tahun dalam produksinya. Pertimbangan lainnya adalah Timken dan Torrington memiliki konsumen yang sama namun produk yang dibuat berbeda, sehingga tingkat kepuasan pelanggan Timken akan meningkat jika dapat memberikan jenis produk yang berbeda dengan bergabungnya Torrington. Biaya tahunan yang dapat dihemat dari aksi konsolidasi ini diperkirakan lebih dari USD80 juta. Jika harga yang dibayar untuk Torrington ke Ingersoll-Rand terlalu tinggi, maka Ingersoll-Rand akan mendapat nilai positif atas sinergi tersebut. Yang menjadi pemikiran dari Timken atas akuisisi ini nanti adalah dampak terhadap neraca. Jika Ingersoll-Rand menginginkan pembayaran dalam bentuk kas sedangkan Timken mendapatkan kas dari pinjaman baru, maka tingkat rasio hutang / kemampuan bayar akan meningkat dan rating investasi Timken akan menurun. Gambaran Industri Bantalan Produk bantalan dapat digunakan untuk perlengkapan rumah tangga, otomotif, bor alat kedokteran gigi, sepatu roda, disk drive computer sampai pesawat luar angkasa. Industry ini juga mengalami berbagai hambatan. Kebijakan dalam industry besi tidak memberikan keuntungan untuk industry bantalan. Karena produk bantalan biasanya dipakai sebagai komponen dalam mesin dan perlengkapan...
Words: 2710 - Pages: 11
...Some suggested answers for the Timken case: 1) Synergies are likely to come mostly from expanding the economies of “scope”. The quote on p.1 is revealing: “… the two companies shared many of the same customers but had few products in common, (therefore) customers would surely appreciate that Timken’s sales representatives could meet more of their needs.” Further on p.8: “… the combined companies… would have many complementary products… (and) only a 5% overlap in their product offerings… (while) the two companies’ customer lists overlapped by approximately 80%.” Timken was already going through a restructuring intended to add new products to its portfolio and add additional components (“bundling”) to further differentiate their products from (cheap) foreign imports. It seems like an acquisition of Torrington would fit perfectly with this goal (see the detail on p.8 about the potential combination of friction and lubrication functions). Also, the merging parties may enjoy economies of scale: they planned to use Timken’s international distribution network to deliver Torrington’s products. p.8 offers some details about efficiencies from the reduced combined sales force and concentrated list of suppliers (both of which are economies of scale) 2) To value do a DCF valuation of Torrington on a stand-alone basis, first we need estimates of stand-alone (i.e., with Ingersoll-Rand, IR) cash flows: those can be inferred from Exhibit 5 (with the corrections that I emailed...
Words: 1589 - Pages: 7
...The Timken Museum in Balboa Park exhibits European and American art in open, spacious galleries. The rooms are airy and bare except for the paintings or tapestries featured on each wall, and one sculpture in the center room. The lighting is mostly provided naturally through large windows and skylights, and the walls are rose-colored with a textured, triangular pattern embossed. The Dutch Room gallery features portraits and landscape paintings of, among others, the accomplished Flemish artist and diplomat Peter Paul Rubens (1577-1640), who is characterized by art historians as the most prominent figure of the seventeenth century Flemish Baroque period. Portrait of a Young Man in Armor, ca. 1620, by Peter Paul Rubens, is painted with oil on...
Words: 844 - Pages: 4
...I. Statement of the Problem Timken Company has been a leader in the bearing company since the early 1900s began to seek ways to expand in 2002. They came up with the decision to acquire a subsidiary of Ingeroll-Rand called Torrington Company, another producer of metal bearings. The acquisition seems to be the right move since the two companies share 80% of the same customers and have a 5% overlap in products they offer. The problem arises when it comes to how to finance the acquisition. Timken is afraid that if they take on anymore debt they will cause credit agencies to downgrade their investment-grade rating. The challenge now lies in developing a financial plan that will allow Timken Company to acquire Torrington without dropping its investment grade. II Alternative Choices 1. Finance with all equity 2. Finance with all debt 3. Finance with mixture of debt and equity Calculations to Use 1. NPV 2. WACC 3. Debt to Capital Ratio 4. EBIT Interest Coverage III. Analysis of Alternatives We first begin by accessing if the company is worth acquiring by calculating NPV using the estimated cash flows of Torrington from Exhibit 5. To use NPV we must first calculate our required rate of return. This can be done by finding the CAPM and WACC for Timken. We begin by finding the cost of debt which can be seen in Exhibit 9. Timken is rated BBB, so we can assume our cost of debt is 7.23%. Then we find CAPM to get the cost of equity. We find that the risk...
Words: 631 - Pages: 3
...Haia 1 Timken Museum is a museum that holds many pieces of art from various time eras, cultures, and artists such as Guercino, Francisco de Zubaran, Luca Carlevarijs and much more, which is all located in Balboa Park, San Diego. The lighting of Timken Museum is cold, blue toned feel that makes the exhibit seem much smaller and enclosed than it really is, yet the lighting contracts from the exhibit itself. The atmosphere of Timken museum is very spacious and hushed, yet the lighting makes it feel small. There are two main exhibits that feature many types of art, Timken Museums art is mainly based upon art from the 1200-1900 eras. Some cultures held in this museum would be Spanish, Dutch, Italian, American, and so much more. The exhibits holds...
Words: 881 - Pages: 4
...The Timken Company Case 46 THE TIMKEN COMPANY In 2002, The Timken Company was considering acquiring The Torrington Company from Ingersoll-Rand. The acquisition would make a clear statement to the market about Timken’s commitment to remain a worldwide leader in the bearing industry as it would result in the combination of more than 100 years of bearing manufacturing and development experience. Because the two companies shared many of the same customers but had few products in common, customers would surely appreciate the ability to have more of their needs met by Timken’s sales representatives. Moreover, Timken’s potential annual cost savings from consolidating manufacturing facilities and processes were estimated to be more than $80 million. If the price paid for Torrington were too high, Ingersoll-Rand, rather than Timken, would capture the value of the synergies. In addition, given the large size of the acquisition, Timken was concerned about the impact on its balance sheet. If Ingersoll-Rand demanded a cash deal and Is this essay helpful? Upgrade your account to read more and access more than 650,000 just like it! get better grades if Timken raised the money with new debt, the increased leverage would almost certainly prompt credit agencies to downgrade Timken’s investment-grade rating. The Bearing Industry Bearings of various sizes and specifications found their way into everything from space shuttles to household appliances, automobiles, dentist drills, roller...
Words: 328 - Pages: 2
...TIMKEN Socio-cultural Environment American Public University Robert J. Robinson TIMKEN Socio-cultural Environment American Public University Robert J. Robinson Introduction In this paper I will address the following issues posed by the Week 6 assignment: Identify Domestic and Global Environments (countries) that are in opposing cultural clusters (as identified in International business: theory and practice) identify which cluster(s) your two countries fit. Identify the socio-cultural parts of each country as related to business for your company. You will need to examine these with the aid of Geert Hofstede (see resources). Identify and discuss the various sociocultural aspects of each country. Do they differ? How? What are the similarities? How would these factors affect your company’s business in your Domestic and Global Environments (countries)? Background The Timken Company (Timken) is an industrial technology company. The company carries out development, production and sales of mechanical components and high-performance steel. They offer engineered high-friction bearings, alloy steels and lubricants. Identify Domestic and Global Environments (countries) that are in opposing cultural clusters (as identified in International business: theory and practice) identify which cluster(s) your two countries fit. Domestically, Timken (United States) is in North American culture cluster - by this I mean that Canada, the United...
Words: 844 - Pages: 4
...Timken experience in “How Wall Street Bent Steel” illustrates that the Pearlstein’s claim that “the cult of shareholder value wrecked American business”. In the corporate world, companies run with two main objectives including the making of profits and maximizing shareholder’s wealth. This are the norms of business. However, Pearlstein thinks in different way. He claims that the pressure by shareholders to maintain their wealth is ridiculous. Pearlstein notes that the urge to maximize shareholder’s wealth is overtaken the customer satisfaction and interests. In America, business ethics has vanished in business operations because companies are striving to do all they can to make money. This is heavily brought by the pressure imposed to managers...
Words: 287 - Pages: 2
...This essay shall discuss the most current U.S. GDP figures and the current state of the economy. It will also discuss how the current state of the economy will or will not impact my organizational profitability, using the Timken Company. The most current figures available for GDP are in reference to 2014. GDP is the measure of all final goods and services made in a year, and made in the United States. This does include foreign country operations that are located in the U.S., however it excludes U.S. plants in foreign countries. The GDP numbers are important because it represents how well the economy is doing. An economy doing poorly will have lower profits for businesses, which effects stock price. This is significant to investors that look at GDP growth, and if it is negative it could suggest that the economy is in a recession. The real GDP is the most looked at figure in discussion with the economy. Real GDP is comparing one year to the other taking out the effects of inflation calculated by the Bureau of Economic Analysis (BEA). According to the BEA, the U.S. GDP increased 2.4 percent in 2014 from the figures found in 2013. The results I will also look at is the latest fourth quarter of 2014, because GDP is reported quarterly as well. The GDP is a very in depth and comprehensive report, therefore I will concentrate on the most important numbers that the report contains. The extras that the report contains breaks down personal consumption expenditures, gross...
Words: 1083 - Pages: 5
...History Friedrich Fischer designs the ball grinder. This machine allows steel balls to be ground to an absolutely round state for the first time – and in large volumes. Thanks to this innovation, he lays the foundation for the entire rolling bearing industry. Thus, the worldwide success story of the ball bearing begins in Schweinfurt.Later, 1883 is officially declared the year in which the company was founded. 1896Friedrich Fischer applies for permission to build a new plant near the train station in Schweinfurt – a step towards a new industrial dimension. The new plant produces 10 million balls per week. The company is incorporated one year later. On 29 july 1905, the FAG brand was registered with the patent office in Berlin. The registered trademark FAG, which stands for Fischers Aktien-Gesellschaft, is protected in over 100 countries today. In 1909 Georg Schäfer takes over the “First Automated Cast Steel Factory, previously Friedrich Fischer, AG“ (“Erste Automatische Gußstahlkugelfabrik, vormals Friedrich Fischer, AG“) The Schaeffler Technologies AG & Co. KG (also known as Schaeffler Group respectively Schaeffler Gruppe inGerman) is a privately owned major manufacturer of rolling element bearings for automotive, aerospace and industrial uses. In Germany, the main brands of the Schaeffler Group – INA, FAG and LuK – are marketed by Schaeffler Technologies AG & Co. KG and LuK GmbH & Co. oHG. Business of the Company Rolling And Plain Bearings * Deep...
Words: 620 - Pages: 3
