ITT Industries to Sell Automotive Electrical Systems Business
25 June 1998
ITT Industries to Sell Automotive Electrical Systems Business to Valeo For $1.7 Billion
ITT Industries' Strategic Review of Brakes Business Continues
WHITE PLAINS, N.Y., June 25 -- ITT Industries, Inc.
and Valeo SA (Paris: VLOF.PA) today announced a definitive
agreement under which Valeo will acquire ITT Industries' automotive Electrical
Systems business, based in Auburn Hills, MI, for US$1.7 billion in cash. The
proposed transaction stems from the strategic review of ITT Industries'
automotive Brake and Chassis and Electrical Systems businesses, announced on
March 18, 1998.
It is expected that the sale of the Electrical Systems unit, which is
subject to U.S. and European regulatory approvals and other customary
conditions, could close by the end of the third quarter of 1998. ITT
Industries' Electrical Systems business, a leading global producer of
automotive windshield wiper systems, fractional-horsepower electrical motors,
air management systems, switches and sensors, had 1997 sales of $1.9 billion.
The operations to be acquired by Valeo include 12 production facilities,
primarily in Europe and North America, employing approximately 13,300 people
around the world.
Travis Engen, chairman, president and chief executive of ITT Industries
said, "This transaction presents an ideal outcome for each party. ITT
Industries is getting a good price for our electrical systems business and
Valeo is acquiring a strong complementary business that is poised for further
growth within the Valeo portfolio."
Mr. Engen said ITT Industries' after-tax proceeds from the sale of the
Electrical Systems unit would be approximately $ 1.3 billion. These proceeds,
and those from any subsequent sales of ITT Industries' automotive businesses
or assets resulting from the ongoing strategic review, will be used to
repurchase common stock, pay down debt and finance further internal and/or
external growth of core businesses.
"This sale is part of our continuing commitment to provide greater
potential for growth, profitability, financial flexibility and predictability,
all aimed at creating greater long-term value for ITT Industries'
shareholders," Mr. Engen said.
Strategic Review Continues
Mr. Engen added that the strategic review of the Brake and Chassis
business is proceeding on schedule with strong interest from a number of
potential buyers, and he expects an announcement on the outcome of the review
by the end of July. The strategic review does not include ITT Industries'
Automotive Components group.
The Brake and Chassis business is based in Frankfurt, Germany. The unit,
a leading producer of electronic braking equipment including anti-lock brake
systems (ABS) and traction control systems (TCS), had 1997 sales of
approximately $2.2 billion.
Balancing the Portfolio for Profitability and Growth
Since becoming an independent company in 1995, ITT Industries has taken
major steps to strengthen its key businesses with significant potential for
enhanced profitability and growth. Through a series of strategic acquisitions
(Goulds Pumps and Kaman Sciences, among others) and divestitures (non-core
businesses primarily in automotive and fluid), the company has positioned
itself going forward with four key growth businesses.
-- Defense: As military forces of the U.S. and other countries are
turning to technology to increase their efficiency and support or supplant
manpower, ITT Industries' defense business has experienced greater demand for
its products and services. The unit generates annual sales of $1.2 billion.
Products include air traffic control systems, jamming devices that guard
against radar-guided weapons, night vision equipment, sophisticated, secure,
digital combat radios, and high-tech electronics to safeguard military
communications on the Internet. Meanwhile, the defense unit is also one of
the largest U.S.-based technical and support services contractors.
-- Electrical Connectors: ITT Industries' electrical connectors are
marketed globally under the ITT Cannon brand, with annual sales of
approximately $600 million. ITT Industries is ranked as one of the top ten
worldwide manufacturers in an industry with more than 1,500 competitors. The
company continues to grow its presence in the fastest growing segments of the
commercial communications markets, including interconnects for cellular
telephones, network communications, smart cards and PC cards for laptop
computers.
-- Fluid Technology: ITT Industries' fluid technology business is the
world's leading provider of pumps, systems and services to move, measure, and
control liquids. Its products include large submersible pumps and hydro-
turbine generators that control urban flooding, treat wastewater, and irrigate
farms. Others include a variety of instruments and controls used in the
commercial and industrial fields, valves for the aerospace and energy markets,
and pumps for the leisure boating, swimming pool, hydrotherapy, pharmaceutical
and biotechnology markets. Following the integration of Goulds Pumps, the
business is now generating significant synergy orders, and has total
annualized sales of $2.1 billion.
-- Automotive Components: This business area, with nearly a half century
of experience in its highly focused markets and more than $540 million in
annual sales, serves a number of demanding technology applications in
automotive fluid handling, brake friction materials and specialty shock
absorbers. Growth opportunities include expansion into new geographic markets
and non-automotive applications for existing products.
Valeo, an independent industrial group, is dedicated to the design,
manufacture and sale of components for cars and trucks. The group operates on
the world market, where it supplies both the original equipment and
aftermarket segments. It serves all car and commercial vehicle manufacturers
in Europe, America and Asia. In 1997, Valeo achieved sales of nearly FFr 34
billion and ranks among the world's leading automotive suppliers. The group
has 36,100 employees.
ITT Industries (http://www.ittind.com) is a leading worldwide-diversified
manufacturing company, with 1997 sales of $8.8 billion from its three primary
business segments: automotive, defense & electronics, and fluid technology.
In the automotive area, ITT Industries is one of the largest independent
suppliers of systems and components to automotive manufacturers. ITT
Industries' defense & electronics business is a leader in the design,
manufacture and support of high technology electronic systems and components
for defense and commercial markets. ITT Industries' fluid technology business
is the world's leading manufacturer of pumps, systems and services for the
movement, measurement, and control of fluids. Based in White Plains, New
York, ITT Industries employs more than 58,000 people around the world.
In addition to the New York Stock Exchange, ITT Industries' stock is
traded under the symbol ("IIN") on the Midwest, Pacific, London, Frankfurt and
Paris exchanges.
ITT Industries and its subsidiaries' news releases are available at no
charge via fax and the Internet. For ITT Industries news and information on
the Internet, visit http://www.ittind.com. To receive releases by fax, call
800-758-5804, extension 110006.