Federal-Mogul Announces Recommended Cash Offer for T & N plc
16 October 1997
Federal-Mogul Announces Recommended Cash Offer for T & N plc
SOUTHFIELD, Mich., Oct. 16 -- Federal-Mogul Corporation
and T & N plc announced today they have agreed to the terms of a
recommended cash offer by Federal-Mogul of 260 pence per share for the entire
issued share capital of T & N. The offer values T & N's issued share capital
at $2.4 billion (1.5 billion pounds sterling).
The offer represents premia of 65% and 74%, respectively to T & N's
average share price in the one month and three months prior to the
September 26, 1997 announcement of Federal-Mogul's approach to T & N.
"This is an excellent transaction for the shareholders and customers of
both companies," said Dick Snell, Federal-Mogul chairman and chief executive
officer. "This represents a significant step toward meeting our objective of
achieving profitable growth through enhanced systems capabilities and
international expansion."
"The combined group will have the scale, reach and the manufacturing and
research capabilities to better serve our customers worldwide and to take
advantage of the significant opportunities created by consolidation trends in
the sector," added Snell. "The group will be led by an experienced and
customer-focused management team comprised of managers from both companies. I
am confident that the cultural fit of the two companies will ensure a smooth
and orderly transition period."
Federal-Mogul's acquisition of T & N will:
-- create a highly competitive Tier I automotive supplier worldwide;
-- expand its manufactured product portfolio to offer systems and modules;
-- enhance Federal-Mogul's position as a supplier of engine and
transmission products worldwide;
-- reinforce Federal-Mogul's ability to provide a high quality service to
both its original equipment and aftermarket customers;
-- extend Federal-Mogul's international reach and accelerate its worldwide
aftermarket growth;
-- create an organization which builds on the strength of the leadership,
expertise and working practices of both companies to further improve
efficiencies.
"The combination of Federal-Mogul and T & N has considerable international
and market logic and should benefit the enlarged group's customers and
employees," said Sir Colin Hope, T & N chairman. "I believe this is a
strategically good deal for Federal-Mogul and, bearing in mind the extent to
which the stock market has undervalued T & N, the cash offer is at a level
which the Board unanimously believes can be recommended to shareholders."
Federal-Mogul will be providing the cash required under the offer through
a bank facility from The Chase Manhattan Bank. Federal-Mogul's intention is to
put in place a permanent capital structure that reflects its financial goals.
Permanent financing will be an appropriate combination of equity and debt
financing.
Significant synergies and operating efficiencies are expected to be
achieved. Federal-Mogul is anticipating that pre-tax synergies will reach in
excess of $100 million in the second year following the acquisition. This
will require one-time restructuring costs approximately equal to the amount of
one year's anticipated synergies. Federal-Mogul expects the acquisition will
generate positive economic value added and positive cash flow. The acquisition
will be moderately accretive to EPS in 1998 and more accretive in 1999.
The Offer is subject to various conditions customary in the United
Kingdom, including acceptances of the Offer by T & N shareholders and the
receipt of all applicable regulatory approvals in the United States and
Europe.
Headquartered in Southfield, Michigan, Federal-Mogul is a $2 billion
global manufacturer and distributor of a broad range of non-discretionary
parts primarily for automobiles, light trucks, heavy trucks, and farm and
construction vehicles. Federal-Mogul was founded in 1899.
Information in this press release contains forward-looking statements
which are not historical facts and involve risks and uncertainties. Actual
results, events and performance could differ materially from those
contemplated by such statements, including, without limitation, as a result of
risks and uncertainties relating to the combination of the businesses of
Federal-Mogul and T & N, conditions in the automotive components industry,
certain global and regional economic conditions, other factors discussed in
this press release and factors detailed from time to time in Federal-Mogul's
filings with the Securities and Exchange Commission.
Not for release, publication or distribution in or into Canada
FEDERAL-MOGUL CORPORATION ("Federal-Mogul")
Recommended cash offer for T&N plc ("T&N")
The Offer
The boards of Federal-Mogul and T&N announce that they have agreed the
terms of a recommended cash offer, to be made by Morgan Stanley & Co. Limited
on behalf of a wholly owned indirect subsidiary of Federal-Mogul, to acquire
the entire issued share capital of T&N.
The Offer will be 260 pence in cash, for each T&N Ordinary Share and
values T&N's entire issued ordinary share capital, assuming that all
outstanding options have been exercised and assuming full take-up in respect
of the scrip alternative to the 1997 second interim dividend, declared on
28 August 1997, at approximately 1.5 Billion pounds.
The Offer represents a premium of 42.9 per cent. to T&N's share price at
the close of business on 25 September 1997, the last dealing day before the
announcement that T&N had received an approach from Federal-Mogul. The Offer
represents premia of 65.1 per cent. and 73.6 per cent. to T&N's average share
price in the one month and three months, respectively, prior to 25 September
1997.
The directors of T&N intend to declare a dividend of 3 pence (net) per T&N
Ordinary Share, to be paid whether or not the Offer becomes unconditional in
all respects.
Strategic Rationale
Federal-Mogul believes that the acquisition of T&N will:
-- create a highly competitive Tier I automotive supplier worldwide.
-- expand its manufactured product portfolio to offer systems and modules.
-- enhance Federal-Mogul's position as a supplier of engine and
transmission parts.
-- reinforce Federal-Mogul's ability to provide a high quality service to
both its original equipment and aftermarket customers.
-- extend Federal-Mogul's international reach and accelerate its worldwide
aftermarket growth.
-- create an organization which builds on the strength of leadership,
expertise and working practices of both companies to further improve
efficiencies.
Federal-Mogul expects significant synergies and operating efficiencies to
be achieved as a result of the acquisition. Based on the information
currently available to it, Federal-Mogul is anticipating annual pre-tax
synergies to reach in excess of US$100 million starting from the second full
year following the acquisition. Achieving these will require a once-off
restructuring charge of an amount approximately equal to the annual level of
synergy benefits achieved in the second year.
Financing
The cash required to satisfy the consideration payable to T&N Shareholders
under the Offer will be provided by a bank facility from The Chase Manhattan
Bank. It is Federal-Mogul's intention to put in place a permanent capital
structure that reflects its financial goals. To that end, Federal-Mogul
intends in due course to refinance the bridge components of this facility with
an appropriate combination of equity and debt financing. Federal-Mogul may
pursue a portion of this refinancing prior to the completion of the Offer.
Comments
Commenting on the Offer, Dick Snell, Chairman and Chief Executive Officer
of Federal-Mogul said:
"This is an excellent transaction for the shareholders and customers of
both companies. It makes us a highly competitive force in the automotive
systems market place worldwide and represents a significant step toward
meeting our objective of achieving profitable growth through enhanced systems
capabilities and international expansion.
The combined group will have the scale, reach and the manufacturing and
research capabilities to better serve our customers worldwide and to take
advantage of the significant opportunities created by consolidation trends in
the sector.
The group will be led by an experienced and customer-focused management
team comprising managers of both companies, and I am confident that the
excellent cultural fit of the two companies will ensure a smooth and orderly
transition period."
Commenting on the Offer, Sir Colin Hope, Chairman of T&N said:
"The combination of Federal-Mogul and T&N has considerable international
and market logic and should benefit the enlarged group's customers and
employees.
I believe this is strategically a good deal for Federal-Mogul and, bearing
in mind the extent to which the Stock Market has undervalued T&N, the cash
offer is at a level which the board of T&N unanimously believes can be
recommended to shareholders."
This summary should be read in conjunction with the full text of the
following announcement.
16 October 1997
Press Enquiries
Federal-Mogul T&N
Kimberly Welch, 1-248-354-1916 Sir Colin Hope, 44-171-380-8200
Morgan Stanley & Co. Limited N M Rothschild & Sons Limited
Simon Robey, 44-171-513-5000 Nigel Higgins, 44-171-280-5000
William Spurgin, 44-171-280-5000
Brunswick Shandwick Consultants
John Sunnucks, 44-171-404-5959 Gillian Pattison, 44-171-329-0096
Morgan Stanley & Co. Limited, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting for Federal-Mogul and the
Offeror and no one else in connection with the Offer and will not be
responsible to anyone other than Federal-Mogul and the Offeror for providing
the protections afforded to customers of Morgan Stanley & Co. Limited nor for
giving advice in relation to the Offer.
N M Rothschild & Sons Limited, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting for T&N and no one else in
connection with the Offer and will not be responsible to anyone other than T&N
for providing the protections afforded to customers of N M Rothschild & Sons
Limited nor for giving advice in relation to the Offer.
The Offer will not be made, directly or indirectly, in or into Canada.
There will be an analyst meeting at 09:30 and a press conference at 11:30,
both at the Queen Charlotte Room, The Brewery, Chiswell Street, EC1.
Not for release, publication or distribution in or into Canada
Federal-Mogul Corporation ("Federal-Mogul")
Recommended cash offer for T&N plc ("T&N")
1. Introduction
The boards of Federal-Mogul and T&N announce that they have reached
agreement on the terms of a recommended cash offer, to be made by Morgan
Stanley & Co. Limited on behalf of a wholly owned indirect subsidiary of
Federal-Mogul, to acquire the whole of the issued share capital of T&N. The
Offer values each T&N Ordinary Share at 260 pence and T&N's entire issued
ordinary share capital, assuming that all outstanding options have been
exercised and assuming full take-up in respect of the scrip alternative to the
1997 second interim dividend, declared on 28 August 1997, at approximately
1.5 billion pounds.
The Offer represents a premium of 42.9 percent to T&N's share price at the
close of business on 25 September 1997, the last dealing day before the
announcement that T&N had received an approach from Federal-Mogul. The Offer
represents premia of 65.1 per cent. and 73.6 per cent. to T&N's average share
price in the one month and three months, respectively, prior to 25 September
1997.
The directors of T&N intend to declare the T&N Dividend of 3 pence (net)
per T&N Ordinary Share, to be paid whether or not the Offer becomes
unconditional in all respects. The record date for the T&N Dividend will be
prior to the date on which the Offer becomes unconditional in all respects.
Further details of the T&N Dividend will be set out in the formal Offer
document.
The directors of T&N, who have been so advised by N M Rothschild & Sons,
consider the terms of the Offer to be fair and reasonable. In providing
advice to the board of T&N, N M Rothschild & Sons has taken account of the
commercial assessments of the directors of T&N. Accordingly, the directors of
T&N unanimously recommend T&N shareholders to accept the Offer.
Cazenove & Co. are brokers to the Offer.
2. The Offer
The Offer, which will be subject to the conditions and further terms set
out in Appendix I and to be set out in the formal Offer document when issued,
will be made on the following basis:
For each T&N Ordinary Share 260 pence in cash
3. Further details of the Offer
T&N Ordinary Shares will be acquired by the Offeror fully paid and free
from all liens, equities, charges, encumbrances and other interests and
together with all rights now or hereafter attaching thereto, including the
right to receive and retain all dividends and other distributions declared,
made or payable hereafter other than the right to receive and retain the
second interim dividend of 3.2 pence (net) per T&N Ordinary Share payable on
14 November 1997, or the scrip alternative to such dividend, and the T&N
Dividend of 3 pence (net) per T&N Ordinary Share.
The Offer will extend to any T&N Ordinary Shares which are unconditionally
allotted or issued prior to the date on which the Offer closes (or such
earlier date, not being earlier than the date on which the Offer becomes
unconditional as to acceptances or, if later, the first closing date of the
Offer, as Federal-Mogul may, subject to the provisions of the City Code,
decide) as a result of the exercise of options under the T&N Share Option
Schemes or otherwise.
The conditions and further terms of the Offer are set out in Appendix I.
4. Information relating to Federal-Mogul
Federal-Mogul manufactures and distributes worldwide a broad range of
precision parts, primarily vehicular components for automobiles and light
trucks, heavy duty trucks, farm and construction vehicles and industrial
products. The company manufactures sealing systems, fuel systems, engine
bearings, lighting products, pistons and chassis products. The company
engineers and manufactures products for original equipment manufacturers,
principally the major automotive manufacturers in the United States and
Europe, and also provides these and related products to aftermarket customers.
Federal-Mogul has a worldwide network of distribution points to service its
aftermarket customers. The group has 90 manufacturing locations in
16 countries and employs approximately 15,700 people worldwide.
For the twelve months to 30 June 1997, Federal-Mogul's results under US
GAAP comprised consolidated net income before exceptional items of
US$52.6 million (32.9 million pounds) on net revenues of US$1,939 million
(1,212 million pounds). As at 30 June 1997, Federal-Mogul had net assets of
US$335 million (209 million pounds) and net borrowings of US$327 million
(204 million pounds). Federal-Mogul's common stock is traded on the New York
Stock Exchange, with a current equity market capitalization of
US$1,666 million (1,041 million pounds).
The Offeror will be a UK company, wholly owned indirectly by
Federal-Mogul, which will be incorporated to make the Offer on behalf of
Federal-Mogul.
5. Information relating to T&N
T&N is a major supplier of high technology automotive components,
engineered products and industrial materials, with about 80 per cent. of its
sales relating to the world automotive industry. The group is strategically
focused on the transportation, marine and power generation markets. T&N is
structured into six global Product Groups: Piston Products, Bearings,
Friction Products, Composites and Camshafts (incorporating Powder Metal
Products), Sealing Products and Engine Parts Aftermarket. T&N is also a
leading regional producer of Heat Transfer Products in South Africa for
domestic and export markets. T&N operates in around 200 locations in
24 countries, employs over 28,000 people worldwide and serves customers in
more than 150 countries. It also has technical centers in the UK and Germany
with a North American facility opening in 1997.
For the twelve months to 30 June 1997, T&N's results, under UK GAAP
comprised consolidated net income before exceptional items of 97.6 million
pounds (US$156.2 million) on net revenues of 1,837 million pounds
(US$2,939 million). As at 30 June 1997, T&N had net assets of 142 million
pounds (US$228 million) and net borrowings of 256 million pounds
(US$410 million).
6. Background to and Strategic Rationale for the Offer
In his address to shareholders, customers and employees in Federal-Mogul's
1996 annual report, Chairman and Chief Executive Officer, Dick Snell, stated
that the company was moving forward in a new direction, focusing on profitable
growth with an emphasis on enhancing systems and modules capabilities and
expanding internationally in both the original equipment manufacturers and
aftermarket segments. This objective was to be achieved through a combination
of organic growth and an aggressive acquisition strategy. The acquisition of
T&N represents a significant step in meeting the second part of this
objective.
The acquisition will create a highly competitive Tier I automotive systems
supplier worldwide.
The combined companies would have had combined revenues for 1996 of
US$5,160 million, over 43,700 employees, extensive operations in North
America, Europe and the rest of the world and a broad customer base.
Federal-Mogul's management believes that, as a result of combining
complementary products on a worldwide basis, Federal-Mogul will have the
scale, reach, financial strength and technological capabilities to achieve
strong growth and to participate in the consolidation of the automotive sector
worldwide.
Given the expected synergies and increased market opportunities created
through this combination, Federal-Mogul's management believes the acquisition
will be beneficial to shareholders, customers and employees.
Products
The combined product range will position Federal-Mogul as a strong
worldwide supplier of engine and transmission parts with highly competitive
market positions in sealing products, engine bearings, piston rings and
pistons. Federal-Mogul believes that the acquisition will:
-enhance systems capability through the ability to offer customers engine
and transmission parts;
-provide Federal-Mogul with full piston systems capabilities;
-enhance Federal-Mogul's sealing systems capabilities by complementing its
oil seals business with T&N's strong European position in gaskets; and
-allow Federal-Mogul to gain entry into valvetrain systems through T&N's
camshaft and powdered metal business.
Based on combined historical 1996 revenues, Federal-Mogul's revenues for
engine systems and for sealing systems would have been US$2,950 million and
US$720 million respectively (representing increases of 243% and 140%
respectively, over Federal-Mogul's standalone figures for that year). On the
same basis, Federal-Mogul's friction products would have had revenues of
US$525 million.
Geographic Profile
Federal-Mogul's reach will be enhanced by the complementary geographic
profile of T&N. Prior to the acquisition, 60% of Federal-Mogul's revenues
were generated in North America, 22% in Europe and 18% in the rest of the
world. The geographic profile of the two companies combined, based on
historical 1996 revenues, would have been 42% North America, 44% Europe and
14% rest of world. In addition, Federal-Mogul will gain access to many new
markets.
Customers
The acquisition will enable Federal-Mogul to bring systems solutions to
original equipment manufacturers for a broad range of hard engine products and
to meet their increasing demands for continuous product and cost improvement.
The acquisition strengthens Federal-Mogul's position as an aftermarket
supplier by combining Federal-Mogul's leading position in the North American
engine parts aftermarket with T&N's attractive position in this sector, where
it is present in Europe, North America, Mexico, South America, South Africa
and South East Asia.
Research and development
The acquisition will enhance Federal-Mogul's material development and
research and development capabilities and will position the company as a
significant force in patented technology products and processes.
Financial benefits
Federal-Mogul expects significant synergies and operating efficiencies to
be achieved from the integration of the two businesses. Major synergies are
expected to arise from consolidating the aftermarket operations in North
America and Europe and from improved efficiencies in working practices. Other
synergies are expected in the areas of purchasing, production, research and
development, working capital efficiencies and in the form of reduced capital
expenditures.
Based on the information currently available to it, Federal-Mogul is
anticipating annual pre-tax synergies to reach in excess of US$100 million
starting from the second full year following the acquisition.
Achieving these benefits will require a once-off restructuring charge in
the first year following the acquisition of an amount approximately equal to
the annual level of synergy benefits achieved in the second year. This charge
will be of an amount at least equal to any synergy benefits achieved in the
first year following the acquisition.
Federal-Mogul expects that the acquisition will be modestly accretive to
earnings per share in 1998 and more accretive to earnings per share in
1999. This statement should not be interpreted to mean that the future
earnings per share of Federal-Mogul will necessarily be greater than the
earnings per share of Federal-Mogul for the financial year ended 31 December
1996.
Federal-Mogul also expects that the acquisition will provide positive
Economic Value Added and have a positive cash flow impact.
Federal-Mogul intends to maintain T&N's 500 million pounds insurance
policy in respect of asbestos. In addition, Federal-Mogul will book an
incremental 367 million pounds asbestos provision. No charge to future
earnings is anticipated for asbestos.
Competition regulation
The Offer is subject to regulatory consents and confirmations being
obtained, both in the US and in a number of European countries. Federal-Mogul
and T&N are committed to working together to obtain the regulatory approvals
within the normal City Code timetable. Federal-Mogul has agreed with T&N that
divestitures of at least some thin wall bearings assets may be required.
Federal-Mogul is confident that any such divestitures will not materially
affect the underlying strategic rationale for the acquisition. The parties
hope that it will not be necessary to extend the normal City Code timetable,
but Federal-Mogul has agreed to apply for extensions from the Panel if
necessary. The parties are confident that, in the absence of unforeseen
regulatory requirements, the Offer will not lapse for lack of regulatory
consents or confirmations.
Federal-Mogul and T&N agree that the acquisition should assist the
combined entity to compete in the intensely competitive automotive components
industry.
In order to re-inforce Federal-Mogul's commitment in relation to the
obtaining of relevant regulatory approvals, Federal-Mogul has agreed, in the
event that the Offer were to lapse as a result solely of Federal-Mogul
invoking any of conditions (b) to (d) inclusive as set out in Appendix I, at
the option of T&N to either subscribe 50 million pounds for ordinary shares in
T&N worth 40 million pounds or to pay 10 million pounds in cash to T&N.
7. Financing
The cash required by Federal-Mogul to satisfy the consideration payable to
T&N shareholders under the Offer will be provided from a bank facility,
including long term components and bridge components, under two credit
agreements between Federal-Mogul, The Chase Manhattan Bank and Chase
Securities, Inc.
It is Federal-Mogul's intention to put in place a permanent capital
structure that reflects its financial goals. To this end, Federal-Mogul
intends in due course to refinance the funds provided from the bridge
components of this facility with an appropriate combination of equity and debt
financing.
Federal-Mogul may pursue a portion of this refinancing prior to the
completion of the Offer.
8. Financial effects of acceptance
The following tables set out, for illustrative purposes only and on the
bases and assumptions set out below, the financial effects of acceptance on
capital value and gross income for a holder of one T&N Ordinary Share
accepting the Offer if the Offer becomes or is declared unconditional in all
respects:
A. Increase in capital value Notes Pence
Cash consideration 260
Market value of one T&N Ordinary Share (i) 182
Increase in capital value 78
This represents an increase of 42.9%
B. Increase in gross income
Gross income from cash consideration (ii) 17.0
Gross dividend income from one
T&N Ordinary Share (iii) 7.5
Increase in gross income 9.5
This represents an increase of 126.7%
Notes:
(i) Based on the closing middle-market quotation of 182 pence per T&N
Ordinary Share, as derived from the London Stock Exchange Daily Official List,
on 25 September 1997.
(ii) The gross income from the cash consideration has been calculated on
the assumption that the cash is re-invested to yield 6.42 per cent. per annum,
being the gross yield shown by the FTSE Actuaries average gross redemption
yield for medium coupon British Government securities of maturities of five to
fifteen years on 14 October 1997 as published in the Financial Times on
15 October 1997, the latest practicable date prior to this announcement.
(iii) The gross dividend income from T&N Ordinary Shares is based on
aggregate dividends of 6.0 pence (net) per T&N Ordinary Share being the total
of the 3.0 pence (net) interim dividend for the six months ended
30 June 1996 and the 3.0 pence (net) special first interim dividend in lieu of
the final dividend for the financial year ended 31 December 1996, together
with an associated tax credit of 20/80ths of the amount paid.
(iv) In assessing the financial effect of acceptance, no account has been
taken of the T&N Dividend and save as disclosed in note (iii) above, no
account has been taken of any liability to taxation.
9. Management and employees
Federal-Mogul attaches great importance to the skills and experience of
the existing management and employees of T&N and believes that as a result of
the acquisition there will be greater opportunities within the Federal-Mogul
Group.
Federal-Mogul has given assurances to the Board of T&N that the existing
rights of employees of T&N, including pension rights, will be fully
safeguarded.
Sir Colin Hope has agreed to become International Advisor to Federal-Mogul
for up to two years from the completion of the acquisition. In addition, two
non-executive directors of T&N are to be invited to join the Board of Federal-
Mogul.
10. T&N Share Option Schemes
The Offeror will make appropriate proposals to holders of options under
the T&N Share Option Schemes, to the extent that options are not exercised,
once the Offer becomes or is declared unconditional in all respects.
11. General
Neither Federal-Mogul, nor, so far as Federal-Mogul is aware, any person
acting in concert with Federal-Mogul, owns or controls any T&N Ordinary Shares
or has any option to acquire any T&N Ordinary Shares.
The Offer will be on the terms and will be subject, inter alia, to the
conditions which are set out in Appendix I hereto and those terms which will
be set out in the formal offer document and such further terms as may be
required to comply with the provisions of the City Code.
The availability of the Offer to persons not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions. Persons
who are not resident in the United Kingdom should inform themselves about and
observe any applicable requirements.
The Offer will not be made, directly or indirectly, in or into Canada.
Accordingly, copies of this announcement are not being, and must not be,
mailed, or otherwise distributed or sent in or into Canada and persons
receiving this announcement (including custodians, nominees and trustees) must
not distribute or send it into or from Canada. Doing so may invalidate any
purported acceptance.
It is expected that the Offer document will be posted to T&N Shareholders
on 13 November 1997.
This announcement does not constitute an offer or any invitation to
purchase any securities.
Appendix II contains definitions of the terms used in this announcement.
12. Bases and sources
(a) References to T&N's share price as at a specified date are based upon
the closing middle-market quotation for T&N Ordinary Shares as derived from
the London Stock Exchange Daily Official List for that date.
(b) References to the value which the Offer places on T&N's entire issued
ordinary share capital have been calculated using the Offer value of
260 pence per T&N Ordinary Share and T&N's fully diluted ordinary share
capital, meaning the number of issued T&N Ordinary Shares as at
13 October 1997 and all outstanding options under the T&N Share Option Schemes
and assuming full take-up of the scrip alternative to the 1997 second interim
dividend.
(c) The premia of the Offer over T&N's average share price in the one
month and three months prior to 25 September 1997 have been calculated using
the Offer value of 260 pence per T&N Ordinary Share and the arithmetic mean of
the closing middle-market quotations for T&N Ordinary Shares as derived from
the London Stock Exchange Daily Official List for the one month of 157.5 pence
and for the three months of 149.75 pence respectively.
(d) The figures in paragraphs 4 and 5 for consolidated net income before
exceptional items, for Federal-Mogul and T&N respectively, have been
calculated by Morgan Stanley on the basis of certain assumptions.
(e) The statements in paragraph 6 as to the combined revenues, employees
and geographic profile of Federal-Mogul and T&N for 1996 are derived from the
published annual report and audited annual financial statements for
Federal-Mogul Group for the year ended 31 December 1996 and the published
consolidated annual report and accounts for T&N for the year ended
31 December 1996. No account has been taken of differences between UK GAAP
and US GAAP. In addition, in the statements in paragraph 6 as to the combined
revenues, employees, geographic profile, customers and financial benefits, no
account has been taken of any divestitures which might be required by anti-
trust authorities.
(f) The statements in paragraph 6 as to the effect of the acquisition on
Federal-Mogul's earnings per share assume that Federal-Mogul has implemented
an appropriate refinancing.
(g) Unless stated otherwise, US dollars have been converted into pounds
sterling and vice versa at the rate of 1.6 US dollars to 1.0 pound sterling.
(h) The current equity market capitalization of Federal-Mogul of
US$1,666 million has been calculated using the closing middle-market quotation
of Federal-Mogul's common stock on the New York Stock Exchange as at
14 October 1997 and the number of issued common stock as at 14 October 1997.
13. Certain Considerations
This announcement includes certain forward-looking statements, including,
without limitation, statements concerning the synergies and accretion to
Federal-Mogul's earnings per share expected by Federal-Mogul and the other
financial and non-financial benefits to Federal-Mogul of the acquisition and
the expectation that there will be no future charges to earnings relating to
asbestos. These statements are based on best information currently available
to Federal-Mogul. Any forward-looking statements, however, involve risks and
uncertainties and are subject to change based on various factors which might,
in the future affect Federal-Mogul's financial performance. Statements
concerning synergies and other benefits and accretion to Federal-Mogul's
earnings per share expected by Federal-Mogul are based on certain assumptions
related to the combined businesses of Federal-Mogul and T&N, developments and
conditions in the automotive components industry, general business and
economic conditions and other matters that are subject to significant
uncertainties and contingencies, many of which are outside the control of
Federal-Mogul and, therefore, such statements are inherently imprecise and
there can be no assurance that they will, in fact, be realized.
16 October 1997
Morgan Stanley & Co. Limited, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting for Federal-Mogul and the
Offeror and no one else in connection with the Offer and will not be
responsible to anyone other than Federal-Mogul and the Offeror for providing
the protections afforded to customers of Morgan Stanley & Co. Limited nor for
giving advice in relation to the Offer.
N M Rothschild & Sons Limited, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting for T&N and no one else in
connection with the Offer and will not be responsible to anyone other than T&N
for providing the protections afforded to customers of N M Rothschild & Sons
Limited nor for giving advice in relation to the Offer.
The Offer will not be made, directly or indirectly, in or into Canada.
SOURCE Federal-Mogul Corporation