The Timken Company - The Case Centre

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Case

Reference no. UVA-F-1472

Subject category: Finance, Accounting and Control

Authors: Kenneth M Eades (Darden School of Business, University of Virginia); Ali Erarac (Darden School of Business, University of Virginia)

Published by: Darden Business Publishing

Originally published in: 2005

Version: 1 May 2018

Revision date: 14-May-2018

Length: 16 pages

Data source: Published sources

Topics: Investing; Firm valuation; Capital structure; Financing strategy; Corporate finance; Discounted cash flow; Financial forecasting; Mergers & acquisitions; Finance; Valuation

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Abstract

The acquisition of Torrington, Inc, from Ingersoll-Rand, Inc, required a strategy that met both the investment and financing objectives of the Timken Company. The case provides an excellent example of the principle that investment and financing decisions can be considered independently. Because of Timken's need to have a sequential financing strategy, the case illustrates the complexities of managing large investment decisions that affect a firm's capital structure. The case is best suited as a firm-valuation exercise in a first-year MBA finance course and is also suitable for executive and undergraduate audiences.

Industry:

Manufacturing