Borg-Warner Automotive to Acquire Kuhlman Corporation
18 December 1998
Borg-Warner Automotive to Acquire Kuhlman Corporation
Acquisition Expands BWA Growth Platform; Globalizes Turbocharger Business
CHICAGO, Dec. 18 -- Borg-Warner Automotive, Inc.
today announced that it has entered into a definitive agreement to acquire
Kuhlman Corporation , a leading supplier of turbochargers and other
highly engineered components for commercial vehicles, for $39 per share, or
$660 million. The merger transaction includes both cash and $150 million of
BWA stock and the assumption of debt.
Significant synergies are anticipated in the near future and the
transaction is expected to be accretive in 1999. The transaction is subject
to approval by Kuhlman shareholders and customary regulatory review. It is
expected to close in the first quarter of 1999.
"We are delighted to finish 1998 with a very strategic acquisition," said
John F. Fiedler, chairman and chief executive officer. "Kuhlman's products
are complementary to ours. The acquisition continues to position us to take
advantage of the growth of direct-injected diesel engines worldwide and
provides immediate new growth opportunities in air and fluid components for
commercial vehicles. Like BWA, Kuhlman is a respected technology leader with
excellent profitability in its businesses. With our expertise in automotive
engine systems and the Kuhlman entree into commercial vehicles, this purchase
will significantly strengthen BWA's growth platform, expand our customer base
and enhance our ability to outpace vehicle industry growth in both sales and
earnings. As a result of the acquisition, we also expect our engine
components and systems businesses to increase from 15% to about half of our
revenue."
Robert S. Jepson, Jr., chairman and chief executive officer of Kuhlman
Corporation, stated that, "We at Kuhlman Corporation found Borg-Warner
Automotive's offer attractive and felt compelled to accept it as being in the
best interests of our shareholders. Recent and continuing changes in
transportation and automotive industries favor larger and internationally
based organizations. Our Schwitzer Group and its employees will now be part
of a much larger organization which will be well-positioned to thrive and to
be more responsive to the global needs of its customers."
Borg-Warner Automotive's John Fiedler added: "The acquisition of Kuhlman
Corporation will result in the creation of a fifth operating unit for BWA in
turbochargers. Their Schwitzer turbocharger unit in the U.S., combined with
our turbocharger business in Europe, will make us a global leader with
sufficient scale to capitalize on growing worldwide demand. In addition, we
can build on their fuel systems and cooling operations to create an
international air and fluid management business in both light and commercial
vehicles."
Kuhlman Corporation's Schwitzer Group represents about $460 million or 60%
of anticipated 1998 revenue of $765 million. The largest part of the segment
is turbochargers, followed by fuel systems and fans/drives and HVAC.
Customers include major original equipment commercial vehicle makers in North
America and Europe.
Fiedler noted that Kuhlman's $300 million electrical transformer and wire
and cable businesses are outside BWA's strategic focus and will be sold.
Morgan Stanley Dean Witter is acting as financial advisor to Borg-Warner
Automotive and has been retained to facilitate the sale.
Kuhlman Corporation is headquartered in Savannah, Ga. Its Schwitzer Group
of vehicle products employs about 2,600 people in 17 facilities in 4
countries.
Chicago-based Borg-Warner Automotive, Inc. is a product leader in highly
engineered components and systems primarily for automotive powertrain
applications. The company operates manufacturing facilities in 12 countries
serving North America, Europe and Asia.
Statements contained in this news release may contain forward-looking
statements as contemplated by the 1995 Private Securities Litigation Reform
Act that are based on management's current expectations, estimates and
projections. Words such as "expects," "anticipates," "intends," "plans,"
"believes," "estimates," variations of such words and similar expressions are
intended to identify such forward-looking statements. Forward-looking
statements are subject to risks and uncertainties, which could cause actual
results to differ materially from those projected or implied in the forward-
looking statements. Such risks and uncertainties include: fluctuations in
domestic or foreign automotive production, the continued use of outside
suppliers by original equipment manufacturers, fluctuations in demand for
vehicles containing the Company's products, general economic conditions, as
well as other risks detailed in the Company's filings with the Securities and
Exchange Commission, including the Cautionary Statements filed as Exhibit 99.1
to the Form 10-K for the fiscal year ended December 31, 1997.
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