CANTON, Ohio (AP) -- The Timken Co. said Thursday that it plans to split the company into two publicly traded companies.
The Canton, Ohio, company's board approved a plan to separate its steel business from its bearings and power transmission business through a spinoff.
Timken said that the bearings and power transmission business will continue to operate under the Timken name with estimated annual revenue of about $3.4 billion. The new engineered steel company will operate as an independent publicly held company with estimated annual revenue of $1.7 billion.
The transaction is expected to be completed within a year.
The company said in June that it formed a strategy committee to consider the split of the business.
Timken President and CEO James Griffith said that the two stand-alone companies will become more competitive by focusing on their core markets.
Joseph Ralston, the board's lead independent director, said that Timken's share price has not reflected the company's improving performance in recent years. With shares trading at a discount to peers, the board recognized the need to examine opportunities to better drive value in the market.
After the separation, Timken Co. will employ 17,000 people, have 35 manufacturing plants, 25 service facilities, four technology centers and a network of sales offices and warehouses around the globe.
Griffith, 59, will stay on as president and CEO until the split is complete, at which point he will retire.
The company said Richard Kyle, 47, will take over as president and CEO. Kyle joined the company in 2006 and has been named chief operating officer of the bearings and power transmission business until he takes over as head of the company.
The board said it plans to name Ward J. "Tim" Timken Jr., 46, to lead the new engineered steel company as its chairman and CEO. Timken joined the company in 1992 and was named president of the steel business in 2004. In 2005, he was elected chairman of the board. He will continue in those roles until the separation.
Following the split, the engineered steel business will remain in Canton and have 3,000 employees, seven manufacturing plants, four warehouses and five sales offices.
The company also said that its board plans to name John M. Timken Jr., 62, as non-executive chairman of The Timken Co. after the split. He has been an active member of the company's board since 1986.
Timken said that it anticipates one-time transaction costs of approximately $125 million tied to the split.
Shares of the company jumped almost 5 percent in after-hours trading to $63.12 following the announcement. The company stock added $1.79 to close regular trading at $60.26.