Sep. 17--The Timken Co. is expanding into what it believes is a key growth market, the aerospace and defense industries.
The Canton bearings and steelmaker on Monday said it is buying Connecticut-based aviation parts maker and repair company The Purdy Corp. for $200 million. The deal, pending regulatory approval, is expected to close by the end of the year.
Purdy, founded in 1946, had annual sales of about $87 million last year.
With more than 200 employees, Purdy designs, manufactures, tests, overhauls and repairs transmissions, gears and other parts and systems for helicopters and fixed-wing aircraft for both the military and commercial aviation businesses.
Timken stock rose 37 cents to $33.25 as of 11:10 a.m. today. Shares are up 15.9 percent, including reinvested dividends, since Jan. 1 and are down 2.3 percent from a year ago.
Timken has previously said it wants to expand into faster-growing businesses such as aircraft components and is targeting growth in Asia to help offset falling demand for steel in North America. The company has cut more than 2,000 jobs in its automotive unit as customers such as Ford Motor Co. and General Motors Corp. scale back orders.
The Purdy acquisition is an important step toward what Timken is trying to achieve through expanding into the aerospace and defense industries, company spokesman Jeff Dafler said.
In August, Timken announced it is undergoing a major reorganization, going from three to two major groups -- the Steel Group and the Bearings and Power Transmission Group. Under its old structure, Timken had the Steel, Industrial and Auto groups.
The Purdy Corp. acquisition would fit under the company's new Bearings and Power Transmission group, which has Aerospace & Defense as one of its four divisions. The other three divisions are Mobile Industries, which includes products and services for motor vehicle, rail, off-highway and agriculture industries; Process Industries, which includes heavy industry, power transmission and energy groups; and Distribution & Services, covering bearings, seals, grease and other products and services.
Timken said it expects to change to the new organization in the fourth quarter. The struggling Auto Group has been a drag on Timken earnings as its automaker customers have cut back production. While the auto unit has lost money this year, Timken executives said they expected it to be profitable in 2008.
"The combination of Purdy's technology, manufacturing expertise and strong customer base make it an excellent fit with Timken's growing aerospace business," said J. Ron Menning, head of Timken's aerospace and defense business.
Timken said July 31 that second-quarter net income fell 14 percent to $55.6 million because of restructuring costs, with the loss in the company's automotive unit widening to $7.39 million from $1.96 million.
The company might spend "several hundred millions of dollars" on acquisitions and new projects to gain from increasing demand for metal products from aircraft builders, James Griffith, Timken chief executive officer, said in February.
Purdy will continue to operate in Manchester, Conn., Dafler said.
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