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LucasVarity Sells Its Heavy Vehicle Braking Business to Meritor

23 November 1998

LucasVarity Sells Its Heavy Vehicle Braking Business to Meritor

    LONDON, Nov. 23 -- LucasVarity plc today announced that it
has signed a definitive agreement to sell its Heavy Vehicle Braking Systems
("HVBS") Division to Meritor Automotive Inc. of the United States
for 235 million pounds sterling ($390 million) in cash.  The transaction,
which is subject to normal regulatory approvals, is expected to close by the
end of the year.
    In LucasVarity's fiscal year 1997, HVBS had total sales of approximately
175 million pounds ($290 million) and net assets of approximately
65 million pounds ($110 million).  Headquartered in Dayton, Ohio, it employs
around 1,800 people and has seven production and technical facilities
throughout the United States and Europe.
    LucasVarity announced its intention to sell its Heavy Vehicle Braking
Systems business in August.  Victor Rice, Chief Executive, said, "We have
secured a full and fair price for HVBS, which reflects its excellent fit with
Meritor.  The heavy vehicle business is consolidating rapidly and Meritor is
very well placed to take HVBS to its next stage of global development.
    "This sale is consistent with our strategy to secure and develop
leadership positions within the automotive and aerospace sectors in those
areas which enable us to exploit our core competencies and which offer
attractive growth prospects," Mr. Rice added.  "Proceeds from the sale will be
applied to the implementation of this strategy and to general corporate
purposes."
    Larry Yost, Chief Executive Officer of Meritor, said, "This acquisition
reflects Meritor's efforts to expand our presence in Europe, an area where we
are focusing substantial energy and resources, and to provide our Heavy
Vehicle Systems original equipment and Worldwide Aftermarket customers with a
comprehensive offering of drivetrain systems and components.  More
specifically, the acquisition will assist Meritor in supporting commercial
vehicle OEMs in Europe with their move toward disc brake technology as they
deintegrate and outsource.  In addition, LucasVarity's highly regarded Heavy
Vehicle Braking Systems Business will bolster Meritor's industry position as a
leading stopping-systems provider.  The price of this acquisition reflects the
value of the business to Meritor, particularly as it relates to the European
braking market and LucasVarity's significant European presence.
    Yost added: "The acquisition also supports Meritor's strategy to grow our
Worldwide Aftermarket business.  HVBS provides additional products for our
aftermarket customers and expands the business's geographical market reach.
The acquisition is expected to add a total of 240 million pounds
($400 million) to Meritor's sales in 1999."
    LucasVarity's Heavy Vehicle Braking Systems components include air disc
brakes, hubs, drums and hydraulic brakes, and naturally complement Meritor's
broad brake system offering of foundation brakes, automatic slack adjusters,
wedge brakes, air disc brakes, anti-lock braking systems, air dryers and
valves.  HVBS will become part of Meritor's Heavy Vehicle Systems and
Worldwide Aftermarket businesses.
    LucasVarity plc designs, manufactures and supplies advanced technology
systems, products, and services in the world's automotive and aerospace
industries.  It has annual sales of over 4 billion pounds and 50,000 employees
worldwide.
    Meritor, with 1998 sales of more than $3.8 billion, is a global supplier
of a broad range of components and systems for commercial, speciality and
light vehicle OEMs and the aftermarket.  Meritor consists of two businesses:
Heavy Vehicle Systems and Light Vehicle Systems.