Dana Comments on SPX Withdrawal of Offer for Echlin
6 May 1998
Dana Comments on SPX Withdrawal of Offer for Echlin
TOLEDO, Ohio, May 6 -- Dana Corporation's
chairman and chief executive officer, Southwood J. Morcott, today made the
following statement in response to SPX Corporation's announcement
that it is withdrawing its exchange offer for Echlin Inc. :
"We are delighted that SPX has withdrawn its offer. We look forward to
completing our transaction with Echlin during the 3rd quarter of 1998 and to
welcoming the Echlin people to the Dana family. Our strategic combination
provides significant upside potential for shareholders of both Dana and
Echlin. Clearly, Dana and Echlin are the ideal combination of products,
markets, leadership, and cultures. The combined company will be a leader in
the automotive original equipment business and the aftermarket. Together, we
will be able to offer more comprehensive product lines to both OE and
aftermarket customers worldwide than either company could achieve
individually.
"Echlin has begun to see the positive financial impact resulting from the
restructuring initiatives put into place over the last year. These Phase I
and Phase II repositioning initiatives are expected to significantly improve
future operating results for the Echlin businesses.
"In addition to the initiatives already well underway at Echlin, the
merger of Echlin with Dana is expected to result in substantial synergistic
benefits for the combined company. We anticipate that these synergies will
add approximately $200 million annually to operating income once full
integration is achieved. Synergies from the transaction are expected to be
$75 million in 1999 and approximately $200 million per year thereafter.
"The $200 million is currently expected to come 45% from manufacturing
productivity improvements, including plant rationalization and workforce
realignment; 30% from the elimination of duplicate functions in aftermarket
sales and marketing, as well as the consolidation of distribution
infrastructure; 15% from the elimination of redundant corporate expenses and
the consolidation of shared administrative services; and 10% from the
consolidation of OE marketing and engineering efforts.
"These synergies do not include significant potential revenue enhancements
stemming from the ability to leverage the two companies' respective strengths.
For example, Dana intends to capitalize on Echlin's premier position in the
aftermarket by accelerating efforts to grow its customer base in the lucrative
and rapidly expanding international markets. Similarly, we expect to see an
increase in sales of Echlin's high-quality brake products for a variety of
original equipment applications. These are but two examples of the
opportunities for growth which will result from this strategic business
combination."
On May 4, 1998, Dana Corporation and Echlin Inc. jointly announced that
each company's board of directors unanimously approved a definitive merger
agreement for a tax-free, stock-for-stock transaction combining a global
leader in automotive original equipment (Dana) with a global leader in the
automotive aftermarket (Echlin). The combined company will have annual sales
of approximately $13 billion and a total equity market value of approximately
$10 billion.
Dana Corporation is a global leader in the engineering, manufacture, and
distribution of products and services for the automotive, engine, heavy truck,
off-highway, industrial, and leasing markets. Founded in 1904 and based in
Toledo, Ohio, Dana operates facilities in 30 countries and employs more than
50,000 people. The company reported record sales of $8.3 billion in 1997.
The Internet address for Dana's home page is http://www.dana.com.
Certain statements contained herein constitute "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve numerous assumptions, known
and unknown risks, uncertainties and other factors which may cause actual and
future performance or achievements of Dana or Echlin, including with respect
to the proposed merger, to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such factors include, among other things, the following:
achieving sales levels to fulfill revenue expectations; the absence of
presently unexpected costs or charges, certain of which may be outside the
control of Dana and Echlin; the cyclical nature of the automotive industry;
failure to achieve synergies or savings anticipated in the merger; general
economic and business conditions; and competition. Additional factors are
detailed in Dana's and Echlin's public filings with the Securities and
Exchange Commission. Dana and Echlin disclaim any responsibility to update
any forward-looking statement provided in this press release.
This release is neither an offer to sell nor a solicitation of an offer to
buy Dana Corporation securities, nor a solicitation of a proxy. Any such
offer or solicitation will only be made in compliance with applicable
securities laws.
SOURCE Dana Corporation