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PE-backed Cone Drive to be acquired by Ohio manufacturer COURTESY PHOTO

PE-backed Cone Drive to be acquired by Ohio manufacturer

BY Wednesday, July 25, 2018 02:24pm

TRAVERSE CITY — A private equity-owned Northern Michigan manufacturer of precision industrial motion control products has signed a deal to sell to Ohio-based The Timken Co.

According to a statement, Timken (NYSE: TKR) of New Canton, Ohio, a manufacturer of engineered bearings and power transmission products, plans to acquire the Traverse City-based Cone Drive Operations Inc., which is expected to generate more than $100 million in sales this year.

Cone Drive manufactures precision motion control, power transmission, and slewing products for a range of sectors, including solar energy, automation, aerial platforms, and food and beverage industries.

The acquisition includes all of Cone Drive’s existing operations, including in Traverse City and Ludington, as well as its H-Fang subsidiary in Jiangyin, China, all of which are expected to remain in operation, according to a statement from Cone Drive.

Terms of the deal were not disclosed.

Timken plans to use debt to fund the deal, which is subject to government and regulatory approvals and is expected to close at the end of August. The company expects the deal to be accretive to earnings when excluding one-time costs related to the transaction in the first year of owning Cone Drive, according to a statement.

For Cone Drive, the deal will drive the company’s growth, as well as give it new capabilities in product development and globalization.

Timken President and CEO Richard Kyle said the addition of Cone Drive will boost his company’s power transmission offerings in global markets, while also giving it access to an additional global customer base and manufacturing operations in the United States and China. The deal also enhances Timken’s profit mix with the addition of a higher margin business.

“The acquisition of Cone Drive will deepen Timken’s position in attractive, high-growth end markets such as solar and increase our power transmission presence in China,” Kyle said in a statement. “Cone Drive is highly complementary to our business, and we plan to generate significant sales and cost synergies with this transaction.”

In 2017, Timken generated $3 billion in revenue and reported net income of $203.4 million, or $2.58 per diluted share, up from nearly $2.67 billion in revenue and net income of $140.8 million in the prior year.

According to a presentation to investors, Cone Drive has “experienced, committed leadership” and will “brings new customers into (Timken’s) portfolio.”

With 500 employees, Cone Drive is owned by the Scottish private equity firm Clyde Blowers Capital, which acquired the industrial gearing manufacturer in 2012.

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