* Chairman Ward Timken to head new steel business
* Group President Richard Kyle to become CEO of Timken post
* Shares rise 6.2 pct after market
(Adds details on new companies' management, background)
Sept 5 Timken Co said its board approved
a plan proposed by an activist investor to spin off the
company's steel business from its bearings and power
transmission operations, sending its shares up 6.2 percent in
Activist fund Relational Investors LLC, Timken's largest
shareholder, had been pushing the company to split its steel
business and had the backing of California State Teachers'
Retirement System (CalSTRS).
Relational controls about 8.06 percent of Timken's shares as
of Aug. 2, according to Thomson Reuters data.
However, Timken had maintained that a standalone steel
business, which accounted for about a third of the company's
sales, would have limited liquidity and not enough financial
flexibility to undertake big projects.
Revenue at the business, which makes more than 450 grades of
carbon and alloy steel, has been declining due to weakness in
the industrial and energy markets.
In May, Timken shareholders supported the proposal to split
The newly formed steel company is expected to have revenue
of about $1.7 billion, while the bearings and power transmission
business, which will continue to operate as Timken Co, is likely
to report revenue of $3.4 billion.
Chief Executive James Griffith will continue to lead the
company until the separation. The board plans to name Richard
Kyle, who is currently group president, in place of Griffith
after the split.
The steel company will be led by Ward "Tim" Timken, who is
currently chairman of the board.
The transaction is expected to be tax-free to shareholders
and should be completed within 12 months, the company said on
The company's shares closed at $60.26 on the New York Stock
Exchange on Thursday.
(Reporting by Rohit T. K. in Bangalore; Editing by Sriraj