Federal-Mogul to Acquire Cooper Automotive
18 August 1998
Federal-Mogul Continues Growth with Agreement to Acquire Cooper Automotive
SOUTHFIELD, Mich., Aug. 18 -- Federal-Mogul Corporation
today announced an agreement to acquire Cooper Automotive, a
business unit of Cooper Industries, Inc. , for $1.9 billion in
cash.
"Cooper Automotive is an excellent strategic fit with Federal-Mogul," said
Dick Snell, Federal-Mogul chairman and chief executive officer. "The addition
of this premier manufacturer with a talented management team further
strengthens Federal-Mogul's leadership position in the automotive industry."
Including Cooper Automotive, Federal-Mogul has completed six acquisitions
and joint ventures in 1998. This year marks the company's most aggressive and
profitable growth period in its 99 year history as Federal-Mogul will have
grown from a $2 billion to a $7 billion company upon completion of the Cooper
Automotive acquisition.
Cooper Automotive had 1997 revenues of $1,873 million and its principal
products include: brakes and friction, lighting, chassis parts, ignition and
wiper blades.
"Since March when we acquired T&N and its Ferodo friction business, we
said this was a future growth platform for Federal-Mogul," said Snell. "This
acquisition makes Federal-Mogul the world leader in brake friction, with over
$1 billion in annual sales."
The addition of Cooper's lighting products provides a strong original
equipment complement to Federal-Mogul's existing lighting business. The
combination makes Federal-Mogul the North American market leader in lighting.
Federal-Mogul's aftermarket offering will be enhanced with such premier
brand names as Wagner/Abex brakes and friction; Wagner/Blazer lighting; Moog
chassis; Champion ignition; and Anco wiper blades.
"These are highly regarded brand names in the marketplace and enjoy the
number one or two leadership position," said Snell. "Expanding our
aftermarket product offering brings efficiencies to our operations that will
benefit our customers."
In addition to certain purchase accounting valuation adjustments, at
closing Federal-Mogul expects to take an estimated $55 million in pre-tax
reserves for severance and exit costs and incur $23 million in integration
costs over the subsequent 18 months. The company is anticipating pre-tax
synergy of approximately $94 million in 1999; $154 million in 2000; and
$161 million in 2001. Federal-Mogul expects the acquisition to generate
substantial economic value added and to be modestly accretive to earnings per
share in 1998; while being accretive $.35 in 1999 and $.80 in 2000. The sale
is subject to regulatory approval and is expected to close in the fourth
quarter of 1998.
Headquartered in Southfield, Michigan, Federal-Mogul is a $5 billion
automotive parts manufacturer providing innovative solutions and systems to
global customers in the automotive, light truck, heavy-duty, railroad, farm
and industrial markets. The company was founded in 1899 and employs 41,000
people in 24 countries. Visit the company's web site at
http://www.federal-mogul.com for more information. Federal-Mogul's press
releases are available by fax through Company News On-Call, call 800-758-5804,
ext. 306225.
Information in this press release contains forward-looking statements
which are not historical facts and involve risk and uncertainties. Actual
results, events and performance could differ materially from those
contemplated by these forward-looking statements including, without
limitations, the cost and timing of implementing restructuring actions related
to the combination of the businesses of Federal-Mogul and Cooper Industries'
automotive business, conditions in the automotive components industry and
other factors discussed in this press release and those detailed from time to
time in the company's filing with the Securities and Exchange Commission.