Collins & Aikman Signs Definitive Agreement to Acquire
Trim Division of Textron Automotive
Acquisition to Nearly Double Collins & Aikman's Annualized Revenues
TROY, Mich., Aug. 7 Collins & Aikman Corporation announced today that it has signed a
definitive agreement to acquire Textron Automotive Company's Trim Division
(TAC-Trim), one of the world's largest suppliers of fully integrated cockpits,
and a major automotive plastics manufacturer in North America, Europe and
South America of instrument panels, interior trim and exterior components.
TAC-Trim had stand-alone fiscal 2000 sales of $1.87 billion and EBITDA of
$229 million. The purchase of TAC-Trim is the latest in a series of
acquisitions, strategically designed to enhance Collins & Aikman's broad
product portfolio of interior trim components and systems that when combined,
position the Company to become the industry's "prime contractor" to supply
fully matched and integrated interior trim components and systems to both OEMs
and Tier 1 integrators.
Transaction Highlights:
* The transaction is accretive for both debt and common equity holders in
the first full year of operations.
* Acquiring TAC-Trim dramatically enhances the scale and scope of
Collins & Aikman's product portfolio, ideally complementing
Collins & Aikman's "Mega Tier 2" strategy.
* TAC-Trim greatly expands Collins & Aikman's unique cross-disciplinary
expertise in acoustics, styling, engineering and manufacturing of
virtually all interior components and systems.
* The acquisition provides Collins & Aikman with strong organic growth,
as over $1 billion of additional annual revenue comes on stream by
2005.
* Collins & Aikman will be the automotive plastics cost and technology
leader in North America and Europe through TAC-Trim, due to
advancements such as their patented Intellimold(TM) injection molding
control process, Invisitec(TM) invisible air bag door technology and
Envirosoft(TM) castable TPU and TPO skin materials.
* The addition of TAC-Trim provides considerable geographic expansion;
nearly doubling Collins & Aikman's European presence and adding
significant South American operations.
The combination of Collins & Aikman and TAC-Trim will create one of the
industry's largest and most broadly based manufacturers of automotive interior
components. Upon completion of the transaction, Collins & Aikman will have
annualized 2001 sales of $3.9 billion, over 25,000 employees, 123 plants and
facilities, and operations in North America, Europe and South America. The
Company will be an industry leader as the number one or number two supplier in
more than a dozen major automotive interior trim product categories; including
instrument panels, door trim, dash insulators, acoustic materials and parts,
molded floors, accessory mats, consoles, air registers and bezels, interior
garnish trim, automotive fabric seat covering, and fully trimmed and assembled
convertible tops. Additionally, the Company will be a leading supplier of
fully integrated cockpit modules, a market that is expected to grow at
double-digit rates over the next five years.
The acquisition of TAC-Trim also brings to Collins & Aikman
industry-leading capabilities in product development, production technology
and manufacturing efficiency. TAC-Trim is one of the industry's lowest cost
suppliers due to numerous advancements such as its patented Intellimold(TM)
injection molding process, which sharply lowers cycle times, labor costs and
scrap rates. TAC-Trim has also developed advanced cast skin production for
high-end surfaces, proprietary invisible air bag door technology
(Invisitec(TM)) where it has leading positions in this rapidly growing product
segment, and Envirosoft(TM) castable TPU and TPO skin materials. With these
capabilities, Collins & Aikman will have unmatched, cross-disciplinary
expertise in acoustics, styling and engineering of resin and fiber-based
components, and the ability to form and assemble multi-material combinations
of hard-molded plastics, slush-molded soft skins in concert with carpet,
fabric, foam, insulation and numerous other materials.
Transaction consideration includes $1.0 billion in cash and assumed debt,
18 million shares of Collins & Aikman common stock and $245 million in
preferred stock of Collins & Aikman Products Company. The cash portion of the
transaction will be financed through the issuance of 32 million shares of
Collins & Aikman common stock to Heartland Industrial Partners, L.P.
(Heartland) and its co-investors, and all debt financing necessary to complete
the transaction will be provided by JPMorgan Chase & Co., Credit Suisse First
Boston, Deutsche Banc Alex Brown Inc. and Merrill Lynch & Co. It is expected
that the Collins & Aikman Products Company 11-1/2% senior subordinated notes
due 2006 will remain outstanding.
The price for all newly issued shares of common stock will be $5.00 per
share. Following the transaction, Collins & Aikman plans to make a rights
offering to shareholders, of new shares, also at a price of $5.00 per share.
The transaction, which is expected to close in the fourth quarter of 2001, is
subject to normal terms and conditions, including the availability of
financing, as well as certain regulatory approvals.
"Collins & Aikman continues to position itself to meet the evolving needs
of the automotive industry," stated Thomas E. Evans, Collins & Aikman's
Chairman and Chief Executive Officer. "As a leading manufacturer of flooring,
plastics, acoustics, fabric and convertible top systems, the addition of
TAC-Trim dramatically enhances our ability to provide our OEM customers with
bundled product packages that incorporate interior styling, component systems
and acoustical technologies. At the same time, our unique 'Mega Tier 2'
position enables us to serve as a 'prime contractor' to the Tier 1 integrators
as they shift their capital and emphasis towards electronics and the delivery
of fully integrated interior modules. Collins & Aikman, as the global leader
in instrument panel technologies, will also be well positioned to benefit from
the increasing movement to cockpit modules, which is anticipated to provide us
with over one billion dollars of additional annual revenue by 2005."
In February 2001, Heartland acquired a controlling interest in Collins &
Aikman to help the company continue to build and grow into the premier
automotive interior components supplier. David Stockman, Heartland's founder,
stated, "The automotive interior platform created by the combination of
Collins & Aikman, the Becker Group, Joan Automotive Fabrics and TAC-Trim will
be a technology and cost leader in virtually all of its product lines. We
believe that this platform, with fiscal 2001 pro forma revenues of nearly
$4 billion, an outstanding management team and extremely promising growth
prospects, creates a very compelling investment in the automotive sector."
The consolidated company's global headquarters will operate from Collins &
Aikman's current location in Troy, Michigan. The transaction, along with the
Company's previously announced Joan and Becker acquisitions, is expected to
generate cost savings of approximately $25 million during the first full year
of combined operation. These savings will be generated through:
-- Increased purchasing savings on consolidated raw material
requirements;
-- Consolidated program management, R&D and engineering functions;
-- Capacity rationalization and increased efficiency of manufacturing
facilities;
-- Reduced global headquarters' costs through an integrated overhead
structure;
-- Systems consolidation and application of "best methods" in
manufacturing.
Evans continued, "With the addition of TAC-Trim, the depth and breadth of
Collins & Aikman's product portfolio will enable us to operate under an
entirely original and differentiated 'prime contractor' business model --
supplying packages of stylistically matched, functionally engineered and
acoustically integrated interior trim components to both Tier 1 interior
integrators and our OEM customers. In summary, with our combined
technological leadership, broad manufacturing capabilities and significant
economies of scale, the 'new' Collins & Aikman will occupy a uniquely
competitive position in the automotive interior industry."
Collins & Aikman Corporation, with annualized sales currently exceeding
two billion dollars, is the global leader in automotive floor and acoustic
systems and is a leading supplier of automotive fabric, interior trim and
convertible top systems. The Company's current operations span the globe
through 13 countries, more than 70 facilities and over 14,000 employees who
are committed to achieving total excellence. Collins & Aikman's high-quality
products combine superior design, styling and manufacturing capabilities with
NVH "quiet" technologies that are among the most effective in the industry.
Information about Collins & Aikman is available on the Internet at
http://www.collinsaikman.com .
This news release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Actual results may
differ materially from the anticipated results because of certain risks and
uncertainties, including but not limited to general economic conditions in the
markets in which Collins & Aikman operates, fluctuations in the production of
vehicles for which the Company is a supplier, changes in the popularity of
particular car models or particular interior trim packages, the loss of
programs on particular car models, labor disputes involving the Company or its
significant customers, changes in consumer preferences, dependence on
significant automotive customers, the level of competition in the automotive
supply industry, pricing pressure from automotive customers, the substantial
leverage of the Company and its subsidiaries, limitations imposed by the
Company's debt facilities, charges made in connection with the integration of
operations acquired by the Company, the implementation of the reorganization
plan, risks associated with conducting business in foreign countries and other
risks detailed from time-to-time in the Company's Securities and Exchange
Commission filings including without limitation, in Items 1, 7, 7a and 8 of
the Company's Annual Report on Form 10-K for the year-ended December 31, 2000
and part 1 in the Company's Quarterly Report on Form 10-Q for the period ended
March 31, 2001.
Collins & Aikman will be conducting a conference call on Wednesday,
August 8, 2001, at 1:00 PM Eastern Standard Time, in conjunction with their
second quarter earnings, to discuss this transaction. The phone number for
this conference call is (973) 321-1030 and no pass code is required.
