Acquisition of Milacron Machine Tool Group Additive to Earnings for UNOVA
21 August 1998
Acquisition of Cincinnati Milacron's Machine Tool Group Additive to Earnings for UNOVA; Establishes One of the World's Largest Manufacturing Systems Companies
BEVERLY HILLS, Calif.--Aug. 21, 1998--UNOVA, Inc. announced today that it has signed a definitive agreement under which it will acquire Cincinnati Milacron's machine tool operations.
UNOVA expects to pay approximately $178 million in cash for these activities. They will add revenues of about $500 million to the Company's Industrial Automation Systems (IAS) segment. The ultimate purchase price of this acquisition will be determined by a formula based on the net book value of the operations on the closing date.
With the acquisition, UNOVA's Industrial Automation Systems (IAS) segment revenues should exceed $1.4 billion in 1999, making the Company one of the largest industrial manufacturing systems and machine tool companies in the world.
The Cincinnati Milacron Machine Tool Group will become part of UNOVA's Industrial Automation Systems (IAS) segment, headquartered in Warren, Mich.
"The addition of these operations expands UNOVA's successful IAS activities into the non-automotive market and adds a business that is well into its turnaround," said Alton J. Brann, Chairman and CEO of UNOVA. "We are already established as a performance leader in the design and installation of large manufacturing systems and our backlog and bookings indicate a favorable outlook for 1999. Now, we plan to combine our success and capabilities with those of Cincinnati's Machine Tool Group, making them even more competitive and accelerating their recent earnings momentum.
"We expect this acquisition will add up to $0.10 to our earnings per share in 1999, and more going forward," added Brann. "It meets all our criteria for value-related returns and earnings growth. Cincinnati's market is growing at about the same rate as our IAS market, but we have proven over many years that we have been able to expand our industrial operations at rates better than 10 percent annually, while also expanding our profit margins. The earnings potential of this acquisition directly supports our growth targets for UNOVA," concluded Brann.
"The combination creates a global powerhouse in the manufacturing systems and machine tool industry," added Clayton A. Williams, UNOVA Senior Vice President and head of the Company's IAS segment. "Over the past five years, we have demonstrated the ability to be successful in an industry where competition is global. In the process, we have transformed our business from selling machines to becoming a functionally seamless `manufacturing solutions' partner to the world's leading automotive and truck producers.
"Directed at the stand-alone machine and systems market primarily in the aerospace and general manufacturing industries, Cincinnati's activities are directly complementary to our product range, allowing us to balance our exposure to large, automotive systems contracts," added Williams. "They bring us an established distribution system in the non-automotive market. The combination, therefore, will result in even better products and improved competitiveness as we benefit from economies of scale and the cross-marketing of products. Just now, we are finalizing the development of CNC machines that will be very competitive in the stand-alone machine market. These will be marketed through Cincinnati's distributor base."
The acquired operations will become a separate division within the UNOVA IAS segment and change their name to "Cincinnati Machine - A UNOVA Company." The operations of the new division will remain at their facilities in Cincinnati, Ohio and Birmingham, England, and the current management team responsible for the division's turnaround is expected to continue to lead the organization. Kyle Seymour, President, will report directly to Williams.
The transaction, which is planned to close by early October this year, is subject to receipt of any required regulatory approvals, but does not require a shareholder vote by either company. The Company will initially use its short-term credit lines to finance the transaction, but is examining hybrid-equity instruments to provide long-term financing. Their possible impact is reflected in the up to $.10 per share earnings accretion quoted earlier.
UNOVA, an industrial technologies company with headquarters in Beverly Hills, California, is a global market leader in the design and installation of sophisticated manufacturing systems for the automotive truck and diesel engine industries and in automated data collection, mobile computing and wireless networking products. UNOVA was formed in October 1997 when its activities were spun off from Western Atlas Inc. With the acquisition, UNOVA's total revenues are expected to approach $2.5 billion in 1999.
Certain forward-looking statements in this release (as defined by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934) relate to matters that are not historical facts. They include, but are not limited to, statements about the demand for the Company's products and services, the Company's ability to profitably exploit new technologies acquired or developed, and the Company's ability to realize its intentions with respect to the future performance of operations being acquired. Such forward-looking statements involve and are dependent upon certain risks and uncertainties. These include, but are not limited to, the following which are beyond the Company's control: the presence of competitors with greater financial and other resources; technological changes and developments; regulatory uncertainties; worldwide political stability and economic conditions; operating risks associated with international activities; the risk that the Company's due diligence procedures may have failed to reveal undisclosed material information concerning acquired operations; and other risks and uncertainties described more fully in the Company's filings with the Securities and Exchange Commission.
NOTE TO EDITORS: This UNOVA release expands on a joint venture release with Cincinnati Milacron.