Detroit Diesel Corporation Announces Tender Offer To Acquire Outboard Marine Corporation
9 July 1997
Detroit Diesel Corporation Announces Tender Offer To Acquire Outboard Marine Corporation
DETROIT and WAUKEGAN, Ill., July 9 -- Detroit Diesel
Corporation and Outboard Marine Corporation , today
jointly announced the signing of a definitive agreement and plan of merger
under which DDC will acquire Outboard Marine Corporation (OMC). Detroit
Diesel will shortly commence a two-step transaction to acquire the outstanding
common shares of OMC for $16 per share. The transaction's two steps are
first: a tender offer for approximately 67% on a fully diluted basis of the
outstanding OMC shares in cash; then, in step two, to purchase the remaining
shares for a combination of cash and 4 million shares of DDC common stock.
The aggregate value of the transaction is approximately $500 million,
including the assumption of OMC's existing debt of approximately $180 million.
In addition to the equity offering, DDC's acquisition will be financed through
a newly established credit facility.
The agreement, which is subject to customary conditions, provides for the
merger of a newly-formed subsidiary of Detroit Diesel with OMC following the
completion of the tender offer. The board of directors of Outboard Marine has
approved the offer and the merger.
Roger S. Penske, Chairman of Detroit Diesel, said, "Our objective is to
further expand our worldwide marine capabilities beyond diesel engines with
the OMC enterprises. OMC, as a leading boat and marine gasoline engine
manufacturer, affords us the opportunity to enhance skills and resources in
new product development, manufacturing processes, marketing, sales and
distribution, and customer service. In addition, we look forward to the
prospect of further developing OMC's proprietary FICHT(TM) fuel injection
technology to optimize the performance, fuel economy and emissions capability
for the next generation of marine and other engines. The DDC/OMC combination
represents an additional example of our commitment to generate long-term
earnings growth and maintain technology leadership for our shareholders."
Referring to OMC's previously announced decision to explore strategic
alternatives in order to maximize shareholder value, Harry W. Bowman, Chairman
of Outboard Marine Corporation, said, "We are very pleased that our process
has resulted in an agreement to team OMC with Detroit Diesel, a company which
has achieved great growth and excellent performance in engineering,
manufacturing and marketing its products. With OMC's shareholders being
offered the opportunity to participate in DDC's future, along with the cash
consideration being offered, we believe this offer maximizes value for our
current owners. The merger also provides the opportunity for an optimistic
future for our dealers, their customers, and our employees. This is a very
positive development for OMC worldwide and the marine industry as well."
Timothy D. Leuliette, Vice Chairman of Detroit Diesel, said, "With OMC's
leading market positions, and its recognized and respected brands such as
Johnson(R) and Evinrude(R), there are many opportunities to expand our marine
business and capitalize on synergies between DDC and OMC operations. We will
proceed with our tender offer shortly, subject to normal regulatory approvals,
and plan to close the subsequent merger transaction within the next 90 days."
Combined net revenues for Detroit Diesel and Outboard Marine Corporation
in 1996 would have been $3.2 billion.
Outboard Marine Corporation is a leading global manufacturer and marketer
of marine engines and boats and related parts and accessories. It is the
second largest manufacturer of outboard engines in the world and the second
largest boat builder in the United States. Some of OMC's products, including
Johnson(R) and Evinrude(R) outboards, and Chris-Craft(R), Grumman(R), Four
Winns(R) and Stratos(R) boats, are among the most widely recognized brands in
the world. OMC manufactures products for world markets in facilities located
around the globe. Approximately 80% of OMC sales are in North America, the
world's largest market for marine products.
Detroit Diesel Corporation is engaged in the design, manufacture, sale and
service of heavy-duty diesel and alternative fuel engines, automotive diesel
engines, and engine-related products, and provides financing through Detroit
Diesel Capital Corporation. The Company offers a complete line of diesel
engines from ten to 10,000 horsepower for the on-highway truck; construction,
mining and industrial; automotive; coach and bus; marine; power generation;
and military markets. Detroit Diesel services these markets directly and
through a worldwide network of more than 2,500 authorized distributors and
dealers.
Detroit Diesel's major shareholder is a wholly-owned subsidiary of Penske
Corporation, a closely-held, diversified transportation services company which
conducts its business through a number of wholly- or partially-owned
companies, including Penske Truck Leasing Company, Diesel Technology Company,
AG Kuhnle, Kopp and Kausch, Penske Automotive Group, Inc., Penske Auto
Centers, Inc., Penske Motorsports, Inc., and Penske Capital Partners. The
Penske group of businesses has annual revenues exceeding $6 billion and
employs more than 25,000 around the world.
Detroit Diesel Corporation's World Wide Web address is
http://www.detroitdiesel.com.
Outboard Marine Corporation's World Wide Web address is
http://www.OMC-online.com.
SOURCE Detroit Diesel Corporation