Timken today announced the completion of its $200 million purchase of Philadelphia Gear, a leading provider of gear-drive systems and aftermarket services for the industrial and military marine sectors.
"The Philadelphia Gear acquisition advances our strategy to diversify Timken’s portfolio well beyond bearings and assist customers with broader mechanical power transmission services," said James W. Griffith, president and chief executive officer of The Timken Company. "We are delighted to welcome Philadelphia Gear’s employees and its excellent brand and reputation to the Timken family."
Philadelphia Gear had trailing 12 month sales through March 2011 of approximately $85 million and recently was awarded an $80 million contract to supply main reduction gears to the US Navy. In addition to military marine applications, the business provides proprietary knowledge of premium gear drives, replacement products and services for growing energy and infrastructure markets.
Based in King of Prussia, Pennsylvania, Philadelphia Gear brings further expertise in mechanical power systems, including five technical service centers located across the United States and six international sales offices. While the business currently has 220 employees, Timken and Philadelphia Gear’s management team plan to establish additional locations to expand the services model globally.
Through the acquisition of substantially all of Philadelphia Gear’s assets by Timken’s wholly owned subsidiary, Timken Gears & Services, the new gear services business becomes part of Timken’s process industries segment. The company expects the addition to be accretive to Timken earnings in the first full year and to generate income exceeding the cost of capital within three years (by 2014).
Chris Coughlin, president of Timken’s process industries segment, said: "Philadelphia Gear and Timken make a powerful combination to deliver broader capabilities and value to our customers while generating new opportunities for profitable growth."
Coughlin named Carl Rapp, current president of Philadelphia Gear, to lead Timken Gears and Services, leveraging the best capabilities of each organization globally.
Rapp said: "With Timken, we have the opportunity to build on a broader global platform to expand our services around the world. That’s good for our customers and employees." Deloitte and Jones Day served as advisors to Timken in this transaction.