Standard Products Announces Agreement to be Acquired by Cooper
28 July 1999
Standard Products Announces Agreement to be Acquired by Cooper Tire & Rubber Company
DEARBORN, Mich., July 27 -- The Standard Products Company
today announced that it has signed a definitive merger agreement
to be acquired by Cooper Tire & Rubber Company . The combination
will make Cooper North America's largest manufacturer of automotive sealing
systems, a core product in its engineered products group, and will also
significantly expand the company's global presence, a key element in its
strategic growth plan. On a combined basis, Cooper expects to generate
approximately
$3.2 billion in annual revenues in its first full year of operation, of which
approximately half will come from tire operations and half from engineered
products. Cooper management expects to realize significant synergies and
anticipates the transaction will be accretive to earnings within the year 2000
and fully accretive in 2001 and beyond.
Standard Products is one of the world's leading suppliers of sealing,
plastic trim and vibration control systems for the worldwide automotive
original equipment industry. This automotive business accounted for
approximately 70% of Standard Products' total 1998 revenues of $1.1 billion.
In addition, Standard Products' Holm Industries Inc. is the largest supplier
of seals for home and commercial refrigerators in North America, and Oliver
Rubber Company is a leading manufacturer of tread rubber and equipment for the
truck retread industry.
Basic Terms and Conditions
The Standard Products outstanding shares will be valued at $36.50 per
share or approximately $584.4 million. In addition, Cooper will assume
Standard Products' outstanding debt which was approximately $173 million at
June 30, 1999. Initially, the purchase will be funded through an expansion of
Cooper's bank facilities and commercial paper program. Following the close of
the transaction, Cooper anticipates refinancing a portion of this debt in the
public term markets.
Under the agreement, Standard Products' stock will be exchanged for $36.50
in cash or the equivalent value of Cooper stock, subject to a collar
arrangement. The exchange ratio will be determined based on the average
closing price of Cooper stock for the 20 trading days ending 5 days prior to
the transaction's closing date. Under the formula, if the price of Cooper
stock rises, the exchange ratio will be reduced, but not below 1.472 Cooper
shares for each Standard Products share. Further, if the price of Cooper
stock falls, the exchange ratio will increase, but not above 1.825 Cooper
shares for each Standard Products share.
The agreement calls for holders of approximately 45% of Standard Products'
outstanding shares to receive stock and 55% to receive cash, resulting in a
tax-free transaction to those Standard Products' shareholders who receive
Cooper stock. If, however, the average of the high and low price of Cooper
shares on the closing date falls below $18, the entire purchase price will be
paid in cash at $36.50 per Standard Products share.
Benefits of the Combined Company
"This acquisition is a tremendous opportunity and exactly what we planned
with our Cooper 21 strategy which we have been formulating over the past two
years," commented Patrick W. Rooney, Cooper Chairman and CEO. "Our Cooper 21
plan calls for our company to be a global player in both our tire and our
engineered products operations," said Thomas A. Dattilo, Cooper's President
and COO. "The combined company will create the market leader in North and
South America for automotive sealing systems, as well as one of the leading
manufacturers in Europe. Standard Products' global footprint of 38 plants and
five technical centers in nine countries represents the very best opportunity
to achieve this objective while maximizing future returns to shareholders, and
also benefiting our customers worldwide," Dattilo concluded.
Standard Products Vice Chairman and CEO, Ronald L. Roudebush, who will be
joining Cooper's board of directors, echoed Cooper management's comments by
saying, "With our leading market positions, breadth of customers and global
footprint, in addition to strong technological capabilities, this is a match
which should be positive for customers, employees and stockholders. Together,
we will be a stronger competitor in the automotive arena where scale, size and
technical depth are increasingly critical for success."
Other Factors
The transaction has been approved by the board of directors of each
company, and is subject to the satisfaction of customary closing conditions,
including requirements of the Hart-Scott-Rodino Act and approval of the
Standard Products shareholders. Two of the largest individual shareholders of
Standard Products stock have executed agreements to vote their shares in favor
of the merger. The proration provisions of the agreement will assure the
approximately 45/55 stock/cash ratio. Completion of the purchase is expected
to take place during the fourth quarter.
Company Descriptions
The Standard Products Company, with 38 plants in nine countries,
manufactures sealing, trim and vibration control systems for the automotive
original equipment industry in North America, Europe and South America.
Subsidiary companies produce rubber and plastic sealing components for the
refrigeration industry in North America and tread rubber and equipment for the
truck tire retreading industry. Standard Products, with corporate
headquarters in Dearborn, Michigan, employs more than 10,000 worldwide. For
more information on Standard Products, visit their web site at:
http://www.standardproducts.com .
Founded in 1914, Cooper Tire & Rubber Company is headquartered in Findlay,
Ohio and specializes in the manufacture and marketing of rubber products for
consumers. Products include automobile and truck tires, inner tubes,
vibration control products, hoses and hose assemblies and automotive sealing
systems. Cooper, with 10,700 employees, is the seventh largest tire
manufacturer worldwide and is a recognized leader in the replacement tire
market as a low-cost, high-quality producer. As an original equipment
supplier of engineered products to vehicle manufacturers, Cooper's expertise
in design, quality, delivery and technological innovation is well respected
throughout the world. For more information, visit the Cooper web site at:
http://www.coopertire.com .
Forward-Looking Statements
This report contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 regarding expectations
for future financial performance, including with respect to the proposed
merger, which involve uncertainty and risk. It is possible the company's
future financial performance and the results of the proposed merger may differ
from expectations due to a variety of factors including, but not limited to:
changes in economic and business conditions in the world, increased
competitive activity, achieving sales levels to fulfill revenue expectations,
consolidation among its competitors and customers, technology advancements,
unexpected costs and charges, fluctuations in raw material and energy prices,
changes in interest and foreign exchange rates, regulatory and other
approvals, the cyclical nature of the automotive industry, risks associated
with integrating the operations of Standard Products and the failure to
achieve synergies or savings anticipated in the merger, failure to satisfy the
closing conditions of the pending merger and the failure to complete the
merger, and other unanticipated events and conditions.
It is not possible to foresee or identify such factors. Any forward-
looking statements in this report are based on certain assumptions and
analysis made by the company in light of its experience and perception of
historical trends, current conditions, expected future developments and other
factors it believes are appropriate in the circumstances. Prospective
investors are cautioned that any such statements are not a guarantee of future
performance and actual results or developments may differ materially from
those projected. The company makes no commitment to update any forward-
looking statement included herein, or to disclose any facts, events or
circumstances that may affect the accuracy of any forward-looking statement.
This release is neither an offer to sell nor a solicitation of an offer to
buy Cooper Tire & Rubber Company securities, nor a solicitation of a proxy.
Any such offer or solicitation will only be made in compliance with applicable
securities laws.