Timken Case Study
TABLE OF CONTENT
Executive summary .................................................................................. 2
1. Introduction.......................................................................................... 3
2. Timken’s Expectations from Torrington .............................................. 3 2.1 Operational Synergies.................................................................... 4 2.2 Financial Synergies ........................................................................ 5
3. Valuation .............................................................................................. 5
4. Debt capital and its effect on Invest grade rating................................ 13 4.1 After acquisition consideration ...................................................... 14
5. Price to accept ...................................................................................... 15
6. Recommendation .................................................................................. 17
Executive Summary:
Timken Company requires a report on its consideration to acquire Torrington from Ingersoll-Rand. This reports provides the needed information on Torrington’s worth, price at which Torrington could be acquired and the acquisition strategies to negotiate its deal. The evaluation uses the discounted cash flow analysis using WACC to calculate the value of Torrington worth with synergies. The value turned out to be more than the estimated minimum value of the target. The final recommendation is to proceed with the acquisition as planed which would be beneficial to the Timken.
1. Introduction
Timken was considering expanding and they sought Torrington Company from Ingersoll- Rand as a worthy acquisition. Timken and Torrington share similar business operations and Timken thought with the combined 100 years of bearing manufacturing and development experience and Timken’s customer and sales operation success, Timken
Executive summary .................................................................................. 2
1. Introduction.......................................................................................... 3
2. Timken’s Expectations from Torrington .............................................. 3 2.1 Operational Synergies.................................................................... 4 2.2 Financial Synergies ........................................................................ 5
3. Valuation .............................................................................................. 5
4. Debt capital and its effect on Invest grade rating................................ 13 4.1 After acquisition consideration ...................................................... 14
5. Price to accept ...................................................................................... 15
6. Recommendation .................................................................................. 17
Executive Summary:
Timken Company requires a report on its consideration to acquire Torrington from Ingersoll-Rand. This reports provides the needed information on Torrington’s worth, price at which Torrington could be acquired and the acquisition strategies to negotiate its deal. The evaluation uses the discounted cash flow analysis using WACC to calculate the value of Torrington worth with synergies. The value turned out to be more than the estimated minimum value of the target. The final recommendation is to proceed with the acquisition as planed which would be beneficial to the Timken.
1. Introduction
Timken was considering expanding and they sought Torrington Company from Ingersoll- Rand as a worthy acquisition. Timken and Torrington share similar business operations and Timken thought with the combined 100 years of bearing manufacturing and development experience and Timken’s customer and sales operation success, Timken