Cooper to Sell Automotive Business to Federal-Mogul for $1.9 Billion
18 August 1998
Cooper to Sell Automotive Business to Federal-Mogul for $1.9 Billion
HOUSTON, Aug. 18 -- Cooper Industries, Inc.
announced today that it has signed an agreement to sell the company's
automotive business to Federal-Mogul Corporation for approximately
$1.9 billion. The sale, which is subject to government approvals and certain
other closing conditions, is expected to be completed by early in the fourth
quarter.
"We are pleased with this agreement, which will conclude our efforts to
exit this business in a way that provides a positive outcome for our
shareholders and our automotive employees and customers," said H. John Riley,
Jr., Chairman, President and Chief Executive Officer of Cooper Industries.
"This action represents another important step in the reshaping of Cooper
into a higher-growth, more profitable company. Over the last several years
we've positioned Cooper for success by divesting cyclical and slower-growth
businesses and completing a number of strategic acquisitions. With today's
announcement, our focus will be on growing our remaining electrical and tools
and hardware product lines as quickly, and as profitably, as possible. As we
have said in the past, the proceeds from this sale will be used to repurchase
shares, pay down debt and make value-adding acquisitions. The result will be
a much stronger Cooper Industries."
In anticipation of the completion of the sale of the automotive business,
Cooper announced on August 5 that its Board of Directors authorized a $500
million stock repurchase program. Cooper currently expects to be able to
complete the purchases before the closing of the automotive transaction.
After debt repayments and the purchases of shares under the current
authorization are complete, Cooper will evaluate the opportunity for
additional share repurchases based on the availability of suitable
acquisitions, market conditions and other business needs.
"We expect to emerge from this last step of our transformation poised for
great success in 1999. The sale of our automotive business will provide ample
resources for us to maintain a healthy balance sheet, make significant
acquisitions, and invest in the growth of our market-leading businesses,"
Riley said.
Cooper's Automotive Products segment consists of Cooper Automotive and
Moog Automotive, leading suppliers of aftermarket parts and original equipment
for automobile manufacturers worldwide. Cooper's automotive products include
well-known brands such as Champion spark plugs, Anco wiper products, Wagner
lighting and brake components, Moog steering and suspension parts and
Precision universal joints. The Automotive Products segment had 1997 revenues
of $1.9 billion and operating earnings of $187 million before nonrecurring
charges. Both Cooper Automotive and Moog Automotive are headquartered in St.
Louis, Missouri.
After the completion of the sale, Cooper will focus on growing its two
remaining segments: Electrical Products and Tools & Hardware. Combined 1997
revenues for ongoing operations for these segments were $3.3 billion, with
ongoing operating earnings of $561 million before nonrecurring gains and
charges. The businesses in the Electrical Products segment manufacture
electrical and circuit protection products for use worldwide in industrial,
commercial and residential construction, maintenance and repair. The segment
also manufactures products for use by utilities and other companies for
primary electrical power transmission and distribution. Some of the major
products in this business segment include Buss and Edison fuses; Crouse-Hinds
and CEAG electrical construction materials; Crouse-Hinds, Fail-Safe, Halo and
Metalux lighting fixtures; Kyle distribution switchgear; and McGraw-Edison and
RTE power and distribution transformers and related products.
The businesses in the Tools & Hardware segment manufacture and market
products for use in industrial, commercial, and residential construction,
maintenance and repair, and for general industrial and consumer use. Some of
the well-known products in this business segment are Campbell chain; Crescent
wrenches; Lufkin measuring tapes; Nicholson files and saws; Plumb hammers; and
Weller soldering equipment. The segment also includes Buckeye, DGD, Dotco,
Cleco, Quackenbush, Airetool, Master Power and Gardner-Denver power tools and
assembly equipment.
Cooper Industries had 1997 revenues of $5.3 billion. Additional
information about Cooper is available on the company's World Wide Web site:
http://www.cooperindustries.com.
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, farm and
industrial markets. The company was founded in 1899 and has 41,000 employees
worldwide.
Statements in this news release are forward-looking under the Private
Securities Litigation Reform Act of 1995. These statements are subject to
various risks and uncertainties, many of which are outside the control of the
company, such as the level of market demand for the company's products,
competitive pressures and future economic conditions. These factors are
discussed in the company's 1997 Annual Report on Form 10-K and other
Securities and Exchange Commission filings.