Borg-Warner Automotive Acquires Kuhlman Corporation
1 March 1999
Borg-Warner Automotive Acquires Kuhlman Corporation; Globalizes Turbocharger Business
CHICAGO, March 1 -- Borg-Warner Automotive, Inc.
today announced that it has completed the acquisition of Kuhlman Corporation
, a leading supplier of turbochargers and other highly engineered
components for commercial vehicles, for $39 per share, or approximately
$680 million.
The merger transaction included both cash and approximately $150 million,
or about 3.3 million shares, of BWA stock and the assumption of debt.
Significant synergies are anticipated and the transaction is expected to be
accretive in 1999.
"Engine technology is driving our growth and the acquisition of Kuhlman
firmly positions us to capitalize on changing technology worldwide," said John
F. Fiedler, chairman and chief executive officer. "With our expertise in
automotive engine systems and Kuhlman's presence in commercial vehicles, this
purchase significantly strengthens BWA's growth platform, expands our customer
base and enhances our ability to outpace vehicle industry growth in both sales
and earnings. We expect our engine components and systems businesses to
increase to almost half of our anticipated $2.5 billion combined worldwide
sales in 1999. The move to direct injected and overhead cam engines, fueled
by concerns for air quality, fuel economy and performance, makes engine
systems our fastest growing business."
The terms of the merger allowed Kuhlman shareholders to elect, subject to
proration, to receive either $39 in cash or .85545 of a share of Borg-Warner
Automotive common stock for each share of Kuhlman common stock. Based on
preliminary information from the exchange agent, the cash portion of the
merger was over-subscribed. Accordingly, approximately 400,000 of the
14 million Kuhlman shares for which a cash election was made will be converted
into Borg-Warner Automotive stock.
Kuhlman Corporation's Schwitzer Group represented about $460 million or
60% of 1998 revenue of $762 million. The largest part of the group is
turbochargers, followed by fuel systems, cooling systems and HVAC. Customers
include major original equipment commercial vehicle makers in North America
and Europe. The group employs about 2,600 people in 18 facilities in
4 countries.
With the acquisition of Kuhlman Corporation, Borg-Warner Automotive will
combine Kuhlman's Schwitzer Group's turbocharger and cooling systems business
with its 3K-Warner turbocharger business in Europe. BWA Turbo Systems will
report to Ronald Ruzic, group president. Reporting to Ruzic will be Tim
Campbell, president and general manager of BWA Turbo Systems, and Karl
Walther, assistant to the group president. Walther headed 3K-Warner and
Campbell had been president of the Schwitzer Group. Kuhlman's Kysor/Snyder
fuel tank business, headed by Jim Christians, general manager, will report to
Gary Fukayama, group president.
BWA Chairman John Fiedler noted that Kuhlman's $300 million electrical
transformer and wire and cable businesses are outside BWA's strategic focus
and are expected to be sold in the near future. Morgan Stanley Dean Witter
has been retained to facilitate the sale.
Kuhlman's corporate headquarters in Savannah, Georgia will be closed
immediately.
Chicago-based Borg-Warner Automotive, Inc. is a product leader in
highly engineered components and systems primarily for vehicle powertrain
applications. The company operates manufacturing facilities in 12
countries serving North America, Europe and Asia. Customers include Ford,
Daimler-Chrysler, General Motors, Toyota, and VW.
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.
Note: Borg-Warner Automotive press releases are available on the Internet
at http://www.bwauto.com or via Company News On-Call:
http://www.prnewswire.com, or via fax, 800-758-5804, ext. 120941.