Snap-on Incorporated to Acquire Sandvik Saws and Tools
22 April 1999
Snap-on Incorporated to Acquire Sandvik Saws and Tools for Approximately US $400 Million in Cash
KENOSHA, Wis. and SANDVIKEN, Sweden, April 22 -- Snap-on
Incorporated and Sandvik AB (Stockholm Stock Exchange: SANDA,
ADR: SAVKY) announced today that their respective boards of directors have
approved a definitive agreement under which Snap-on will acquire Sandvik Saws
and Tools, one of Sandvik AB's business areas, for approximately
US $400 million (SEK 3.3 billion) in cash. The acquisition will be accounted
for as a purchase. Snap-on anticipates the transaction to be neutral to
Snap-on's earnings per share in 1999 and accretive to earnings per share
thereafter.
Sandvik Saws and Tools, based in Sandviken, Sweden is one of the world's
largest manufacturers and suppliers of professional hand tool products. The
company has 12 manufacturing facilities in eight countries. Snap-on will
acquire a royalty-free license that permits it to use Sandvik's trademark for
saws on a worldwide basis for a period of three years and for all other
products for a period of two years. Snap-on expects that a combined
Snap-on/Sandvik hand tool company would have pro forma 1998 annual sales of
approximately US $2.1 billion (SEK 16.7 billion).
"This transaction is part of our strategy to be a key player in the
globalization of the hand tool market," said Robert A. Cornog, Snap-on
Incorporated chairman, president and chief executive officer. "Together, we
will have a solid platform for growth on three continents and significant
operations in Asia. This transaction solidly positions us in the European
tool market and gives Snap-on a major presence in the developing South
American market. Furthermore, the Sandvik hand tools product lines allow
Snap-on to extend its brand presence to new channels in the North American
marketplace.
"Sandvik and Snap-on share a common focus on serving the professional
segment of the industry with innovative, performance-oriented products. The
Sandvik hand tool group is an industry leader in research and development,
distribution and ergonomic design - we are committed to continuing that strong
heritage," continued Mr. Cornog.
"We respect Sandvik hand tool group's employees and their commitment to
excellence. This well-managed company has a highly talented management team,
access to attractive distribution channels and a complementary portfolio of
high-quality products. All of this fits tightly with our global growth
strategy. We look forward to working with the Sandvik team to realize the
opportunities this transaction creates," Mr. Cornog concluded.
Clas Ake Hedstrom, chief executive officer and president of Sandvik AB,
said, "A comprehensive change in structure is required in order to develop the
operations within Sandvik Saws and Tools long term and to achieve global
leadership. Most of all, this requires a substantially greater sales volume
which is not possible with our own organic growth but requires a merger with
another company.
"Accordingly, the sale of Saws and Tools to Snap-on is a logical and
favorable transaction for both companies worldwide. Snap-on, which is a
well-established company with quality products and services, and with a strong
reputation in the industry, will offer highly favorable opportunities for Saws
and Tools' continued development," Mr. Hedstrom continued.
"As a result of the sale, Sandvik's operations are concentrated to our
three core areas: Tooling, Mining and Construction, and Specialty Steels,
where the technology content is large and where we are world leaders in
selected niches. We assess that we can best apply our R&D competence, among
other assets, through investing our resources for expansion within these
areas," Mr. Hedstrom added.
Goran Gezelius, president of Sandvik Saws and Tools, said, "I am excited
about the opportunities this transaction presents. Together with Snap-on, we
will offer customers a full-range of high quality professional tools and
equipment by building upon the combined company's strong brands and
long-standing distribution relationships. We will provide superior products,
services and value to our customers. I am confident our customers and
employees will be delighted with this combination."
Snap-on noted that this combination is about growth, not cost-cutting.
Snap-on anticipates revenue enhancements resulting from, among other things,
utilizing Sandvik Saws and Tools' efficient distribution networks, logistics
capabilities and extensive sales and marketing support; growing its strong
distributor relationships; expanded growth opportunities for Snap-on's and
Sandvik Saws and Tools' products across complementary distribution channels,
including the North American market; and exploiting the combined company's
enhanced European presence.
Completion of the transaction is subject to Sandvik AB shareholder
approval, customary conditions and receipt of necessary governmental approvals
in the United States and Europe. Snap-on intends to finance the acquisition
through existing credit facilities. The companies anticipate that the merger
will close in the beginning of the third quarter of 1999.
Sandvik Saws and Tools develops, manufactures and markets hand held tools
for professional users with sales of SEK 2,694 million in 1998. The Business
Area employs approximately 2,700 people. Of those, approximately
1,000 employees are in Sweden. Products are manufactured at 12 plants in
Sweden, Germany, Portugal, France, England, the United States and Argentina.
Merrill Lynch & Co. acted as financial advisor to Snap-on Incorporated.
Lehman Brothers Inc. acted as financial advisor to Sandvik AB.
Sandvik AB, headquartered in Sandviken, Sweden, is one of Sweden's largest
export companies, with worldwide business activities conducted through
300 companies and representation in 130 countries. The Company has
37,500 employees and annual sales of SEK 42.4 billion (US $5.09 billion).
Sandvik AB consists of six separate business areas responsible for research
and development, production and sales of their respective products. These
business areas include: Sandvik Tooling, Sandvik Mining and Construction,
Sandvik Specialty Steels, Sandvik Hard Materials, Sandvik Process Systems, and
Sandvik Saws and Tools.
Snap-on Incorporated is a US $1.8 billion leading global developer,
manufacturer, and distributor of tool and equipment solutions for professional
technicians, motor service shop owners, specialty repair centers, original
equipment manufacturers, and industrial tool users worldwide. Product lines
include hand and power tools, diagnostics and shop equipment, tool storage
products, diagnostics software, and other solutions for the automotive service
industry. Snap-on employs approximately 12,000 worldwide.
Statements in this release that are not historical facts, including
statements (i) that include the words "believes," "expects," "anticipates," or
"estimates" or words of similar importance with reference to the Corporation
or management; (ii) specifically identified as forward-looking; or (iii)
describing the Corporation's or management's future plans, objectives or
goals, are forward-looking statements. The Corporation or its representatives
may also make similar forward-looking statements from time to time orally or
in writing. The Corporation cautions the reader that these statements are
subject to risks, uncertainties or other factors that could cause (and in some
cases have caused) actual results to differ materially from those described in
any such statement. These important factors include risks associated with
closing of the transaction, which could include failure to receive applicable
approvals and the Corporation's ability to integrate the acquisition. The pro
forma performance stated in the release is subject to risks, including, but
not limited to, final costs associated with financing. Other factors include
the Corporation's ability to withstand external negative factors including
changes in trade, monetary and fiscal policies, laws and regulations, or other
activities of governments or their agencies; significant changes in the
current competitive environment; inflation; currency fluctuations or the
material worsening of the economic and political situation in Asia or other
parts of the world. These factors may not constitute all factors that could
cause actual results to differ materially from those discussed in any forward-
looking statement. The Corporation operates in a continually changing
business environment and new factors emerge from time to time. The
Corporation cannot predict such factors nor can it assess the impact, if any,
of such factors on the Corporation or its results. Accordingly,
forward-looking statements should not be relied upon as a prediction of actual
results. The Corporation disclaims any responsibility to update any
forward-looking statement provided in this release.