Lund to Acquire Deflecta-Shield for $16 Per Share in Cash
26 November 1997
Lund to Acquire Deflecta-Shield for $16 Per Share in Cash, Creating Leading Maker of Light Truck Appearance Accessories
Harvest Partners to Increase Ownership of Lund
ANOKA, Minn., and INDIANOLA, Iowa, Nov. 26 -- Lund
International Holdings, Inc. , a leading manufacturer of
appearance accessories for light trucks, and Deflecta-Shield Corporation
, a leading manufacturer of both light truck and heavy truck
accessories, today announced they have signed a definitive merger agreement
that will create the preeminent manufacturer of light truck appearance
accessories and a leader across the entire truck accessories market.
The agreement, approved unanimously by both Boards of Directors, provides
for Lund to acquire Deflecta-Shield for $16 per share in cash. Under the
agreement, Lund will make a tender offer for all 4.8 million Deflecta-Shield
shares and expects to commence the offer promptly. Two principal
shareholders, who in total own approximately 40% of Deflecta-Shield's shares,
have already agreed to tender their shares. Any shares not tendered and
purchased pursuant to the tender offer will be cashed out in a subsequent
merger at the net cash price of $16 per share, subject to appraisal rights
under applicable Delaware law.
The transaction, expected to close late next month, has a total value of
approximately $90 million including approximately $10 million in assumed debt.
The acquisition is expected to be accretive to Lund's earnings per share in
1998 and increasingly accretive thereafter. Revenues of the combined
companies are expected to be approximately $130 million in 1998.
As part of the transaction, an affiliate of Harvest Partners, a leading
New York private investment firm, will invest as equity approximately
$30 million in Lund to increase its ownership in the Company. Harvest
acquired a 38.4% stake in Lund from founder Allan Lund on September 9, 1997.
Lund International also has committed debt financing of $87 million from
Heller Financial Inc. for the acquisition of Deflecta-Shield and for working
capital.
"This acquisition combines Lund's leading position and brand name strength
in accessories for pick-up trucks, sport utility vehicles, vans and minivans
with Deflecta-Shield's complementary strengths and history of strong revenue
growth to create the leader in the truck appearance accessories market," said
William J. McMahon, Chief Executive of Lund International. "We believe this
company will create tremendous breadth and strength across a wide variety of
products and services for our customers. The acquisition should maximize
value for our shareholders by creating synergies while opening up new sales
opportunities for Lund in the heavy truck category and OEM market. We are
excited by the superb growth prospects of the combined companies."
Russell E. Stubbings, President and Chief Executive Officer of
Deflecta-Shield, said, "Joining a first-class company like Lund International
-- with operations, products and services that complement our own so well --
creates significant benefits for both companies. This strategic partnership
will create tremendous products and services for our customers while
maximizing value for our shareholders. We look forward to working with Lund
to integrate the two companies quickly and effectively."
"The combination of Lund and Deflecta-Shield will create a powerhouse in
the fragmented $1.5 billion light truck accessories market, where no other
company in the markets we serve has annual sales in excess $100 million," said
Ira Kleinman, a General Partner of Harvest Partners who recently became
Chairman of the Board of Lund International. "Lund is a superb platform for
further growth, and we intend to seek more acquisitions in this consolidating
industry."
The closing of the tender offer will be subject to a majority of the
common stock of Deflecta-Shield on a fully diluted basis being tendered, as
well as to other customary conditions. The merger agreement restricts
Deflecta-Shield from actively soliciting any other offers while, consistent
with the fiduciary duties of the Deflecta-Shield Board of Directors, providing
that Deflecta-Shield may respond to certain unsolicited offers or indications
of interest. The agreement also provides for appropriate break-up fees for
Lund under certain circumstances, including the termination of the merger
agreement by Deflecta-Shield to accept a superior proposal, in which event the
shareholder agreement to tender to Lund also terminates.
Piper Jaffray Companies, Inc. is acting as financial advisor to Lund.
Wasserstein Perella & Co. LLC is, the financial advisor to Deflecta-Shield and
provided a fairness opinion to the Company.
Based in Anoka, Minnesota, Lund International Holdings is a leading
designer, manufacturer and marketer of a broad line of fiberglass and plastic
appearance accessories for new and used light trucks, including pick-up
trucks, sport utility vehicles, minivans and other vans.
With annual sales of $72 million, Deflecta-Shield Corporation manufactures
plastic, fiberglass and aluminum appearance accessories for light trucks and
heavy trucks. Based in Indianola, Iowa, the company also supplies suspension
systems and shock absorbers for light trucks.
Harvest Partners, Inc. is a private investment firm which focuses on
management buyouts and growth financings of medium-size manufacturing,
specialty services and distribution businesses. Founded in 1981, Harvest is
best known for its expertise in structuring multinational management buyouts
and for its successful platform acquisitions. Harvest currently has in excess
of $600 million in capital under management from leading U.S. and
multinational institutions, including Asea Brown Boveri; Volvo, an equity
affiliate of Deutsche Bank; MassMutual; PPM America, and several leading
public and private U.S. pension funds.
Statements in this press release relating to future financial results,
ongoing company operations, the effects of the acquisition, trends and market
analysis, among others, are forward-looking statements under the Private
Securities Litigation Reform Act of 1995. These statements involve risks and
uncertainties which could cause results to differ materially from those
anticipated. Among the factors that could cause anticipated results of the
acquisition to differ materially are the following: inability to obtain
expected efficiencies, or to obtain them in a timely manner; inability to
effectively manage a larger enterprise, to integrate the two companies or to
control costs associated with such integration; and the representations,
warranties and covenants made in the merger agreement proving to be materially
untrue. In addition, both Lund's and Deflecta-Shield's business and
operations (and anticipated results) include the following risk Factors:
consumer preference changes, risk of expansion into new distribution channels,
delays in designing, developing testing or shipping of products, increased
competition, general economic developments and trends, developments and trends
in the light truck and automotive accessory market and increased costs. This
is not an exhaustive list and the Company may supplement this list in future
filings or releases or in connection with the making of forward-looking
statements.
SOURCE Lund International Holdings, Inc.