The Timken Company announces an agreement to acquire the assets of Philadelphia Gear Corp., a leading provider of high-performance gear drives and components with a strong focus on value-added aftermarket capabilities in the industrial and military marine sectors, for $200 million.
Based in King of Prussia, PA, Philadelphia Gear had trailing 12-month sales through March 2011 of approximately $85 million. The acquisition brings proprietary power-transmission knowledge of premium gear drives, replacement products and services for growing markets including energy and infrastructure. The business also is a provider of products and services for military marine applications, including a recently awarded $80 million contract to provide main reduction gears for the U. S. Navy.
The addition of Philadelphia Gear to Timken's Process Industries segment significantly expands the range of industrial services capabilities for both companies to offer their customers. The acquisition advances Timken's strategy to offer comprehensive services and solutions to end-users that enhance the performance and productivity of their mission-critical mechanical applications.
"Philadelphia Gear is an excellent fit with Timken," says Chris Coughlin, president of Timken's Process Industries segment. "Like Timken, it is a leader in industrial services providing highly engineered solutions and replacement components for mechanical power transmission equipment. It will strengthen our presence precisely in the areas we've targeted, with excellent prospects for profitable growth via extension to our customer base around the world."
Timken plans to combine Philadelphia Gear, which employs approximately 220, with its Industrial Services business to leverage the best capabilities of each organization across the global markets. Coughlin noted that Timken plans to expand the business with the existing management team. "The synergies in this combination are all about growth," he says.
Timken expects Philadelphia Gear to be accretive to earnings in its first full year and to generate income exceeding the cost of capital by 2014. The company plans to complete the acquisition through its Timken Gears & Services Inc. subsidiary by the third quarter of 2011, pending certain government and regulatory approvals.