Relational Investors Ups Timken Stake Amid Spinoff Battle

Ralph Whitworth’s Relational Investors LLC increased its holding in Canton, Ohio-based manufacturer Timken Co. in the first quarter as he pressured the company to sell its steel unit.

Relational bought 1.12 million shares in the three months ended March 31, increasing its stake to 6.62 million shares valued at $374 million, according to a filing today with the U.S. Securities and Exchange Commission. Relational is the largest single shareholder in Timken with 6.9 percent of outstanding shares, according to data compiled by Bloomberg.

Whitworth won support in a non-binding vote of Timken shareholders on May 7 urging management to spin off the company’s steel unit from its larger ball-bearing business. Directors will study the results and announce steps within 45 days, Chairman Ward J. Timken said in a statement the same day.

Relational and California State Teachers’ Retirement System, a state pension fund, have been lobbying for a breakup of Timken since November on the grounds that it would boost shareholder value. The board argued that a spinoff would boost expenses, reduce efficiency and inflate borrowing costs for an independent steel operation.

Relational sold its $519 million stake in Purchase, New York-based PepsiCo Inc. and bought shares valued at $329 million of Deerfield, Illinois-based food and beverage maker Mondelez International Inc.

Money managers who oversee more than $100 million in equities must file a Form 13F with the SEC within 45 days of each quarter’s end to show their U.S.-listed stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.

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