EXHIBIT 99.1
SERVICE CORPORATION INTERNATIONAL TO ACQUIRE
ALDERWOODS GROUP, INC. COMBINING THE TWO PREMIER
FUNERAL AND CEMETERY SERVICES PROVIDERS IN NORTH AMERICA
EXPECTED TO GENERATE $60 - $70 MILLION IN COST SAVINGS AND PROVIDE BROADER
PLATFORM FOR SCI'S PRODUCT AND MARKETING STRATEGIES
EXPECTED TO BE IMMEDIATELY ACCRETIVE TO SCI'S CASH FLOW AND ACCRETIVE TO
EARNINGS PER SHARE IN 2007
TRANSACTION BUILDS ON BOTH COMPANIES' OPERATING EXCELLENCE
AND COMMUNITY COMMITMENT
HOUSTON, TX and CINCINNATI, OH, April 3, 2006 - Service Corporation
International (NYSE: SCI) ("the Company") and Alderwoods Group, Inc. (NASDAQ:
AWGI) today announced that the Boards of Directors of both companies have
approved a definitive agreement under which SCI will acquire all of the
outstanding shares of Alderwoods for $20.00 per share in cash. The transaction
is valued at $856 million. In addition, approximately $374 million of Alderwoods
debt will remain outstanding or be refinanced.
This transaction combines two of the leading providers of funeral and cemetery
services in North America. With Alderwoods, SCI would have revenues of
approximately $2.5 billion (based on 2005 financial results), and an expanded
geographic footprint which would include a network of 1,712 funeral homes and
490 cemeteries (of which 243 are combination funeral homes and cemeteries) in 48
states, eight Canadian provinces and Puerto Rico.
"This is the right transaction at the right time and is consistent with our
objectives to expand scale and scope, and our focus on disciplined growth
initiatives that generate increased revenues, profitability and cash flow
margins," said Tom Ryan, Service Corporation International's President and Chief
Executive Officer. "In recent years, we have strengthened our balance sheet,
lowered our cost structure, introduced more efficient systems and processes, and
redirected our management team to provide a new foundation for growth. This
transaction will provide us with the ability to serve a number of new,
complementary areas, while enabling us to capitalize on significant synergies
and operating efficiencies. Together with Alderwoods, we will further enhance
our operating expertise and customer, product and marketing strategies across an
expanded geographic footprint."
Paul A. Houston, President and Chief Executive Officer of Alderwoods Group,
Inc., said: "During the past few years, we have restructured our company to
create a more efficient operating structure, introduce innovative products and
services, reduce debt and improve Alderwoods's financial flexibility. Today's
announcement is consistent with our objective of maximizing shareholder value.
In addition, we expect our employees to benefit from being part of a larger,
more diversified organization that is equally dedicated to their success."
Robert L. Waltrip, Chairman of Service Corporation International, said:
"Alderwoods is an ideal strategic partner for us, and this combination positions
SCI for continued growth and leadership in the highly fragmented industry in
which we operate. From an industry perspective, both SCI and Alderwoods have a
strong reputation for providing families with professional and compassionate
service. We look forward to building on this shared commitment and intend to
maintain the strong personal relationships that have been developed over the
years in the many
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communities we serve throughout the United States, Canada and Puerto Rico. On
behalf of SCI, we look forward to working with the employees of Alderwoods to
grow our business."
BENEFITS OF THE TRANSACTION
o ONGOING COST SAVING SYNERGIES. Excluding one-time costs of approximately
$60 million, the transaction is expected to generate annual pre-tax cost
savings of approximately $60-$70 million within 12 to 18 months after
closing. Savings are expected to come largely from shared corporate and
administrative areas and rationalizing duplicative expenses for information
technology, legal and back-office functions. Significant workforce
reductions at the operating level are not expected.
o SIGNIFICANT CASH FLOWS AND FINANCIAL FLEXIBILITY. Both SCI and Alderwoods
benefit from strong operating cash flows. After one-time implementation
costs and the full realization of synergies, the Company expects annualized
cash flow from operations to total approximately $400 million, excluding
insurance segment cash flow. This compares with SCI's current cash flow
expected in 2006 of $295-$315 million. The Company expects to maintain a
balanced approach of investing in its business and returning capital to
shareholders while also supporting a prudent capital structure.
o ACCRETIVE TO CASH FLOW AND EARNINGS. SCI expects the transaction to be
immediately accretive to the Company's cash flow, excluding one-time
implementation costs. The Company also expects that within the first 12 to
24 months after closing, the transaction will be accretive to earnings per
share, excluding one-time implementation costs.
o EXPANDED GEOGRAPHIC FOOTPRINT IN NEW, COMPLEMENTARY AREAS. With Alderwoods,
SCI will serve many new areas throughout the U.S., Canada and Puerto Rico,
providing the Company with a larger platform from which to implement its
multi-brand strategy, featuring its Dignity Memorial(R) network.
Additionally, an expanded geographic footprint will offer customers
enhanced transferability of preneed funeral and cemetery needs.
o CUSTOMER STRATEGY. SCI is transitioning from the industry's traditional
one-size-fits-all approach to a flexible operating and marketing strategy
that recognizes customers' personal needs and preferences. With the
addition of Alderwoods, the Company will have a broader platform upon which
to accelerate its product and marketing strategies. By utilizing the best
practices and processes of both companies, SCI believes it can achieve even
higher levels of customer satisfaction and loyalty.
FINANCING
SCI currently has $470 million in cash on its balance sheet; the Company intends
to fund the transaction in all cash. SCI has received a commitment letter from
JPMorgan for an $850 million bridge facility. The Company also believes it has
access to a number of debt capital markets and will determine an optimal funding
structure prior to the close of the transaction.
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DIVIDEND POLICY AND SHARE REPURCHASE PROGRAM
It is currently anticipated that SCI will continue its regular quarterly cash
dividends. However, declarations of dividends are determined by the Board of
Directors each quarter after its review of the Company's financial performance.
Since August 2004, SCI has repurchased 47.7 million of its shares at an average
price of $7.03, for a total of $335.4 million. SCI currently has an additional
$64.6 million previously authorized by the Board under its existing share
repurchase program.
APPROVALS AND PATH TO CLOSING
The transaction is subject to approval by the shareholders of Alderwoods and the
satisfaction of customary closing conditions and regulatory approvals, including
expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is
expected to close by the end of the 2006 calendar year and is not subject to any
financing conditions.
ADVISORS
In connection with the transaction, JPMorgan is acting as financial advisor to
SCI and Wachtell, Lipton, Rosen & Katz is serving as its legal counsel. Bear
Stearns & Co. Inc. provided a fairness opinion to Alderwoods and is acting as
its financial advisor, and Jones Day is serving as its legal counsel.
ANALYST/INVESTOR CONFERENCE CALL AND WEBCAST
SCI will hold a conference call and webcast today at 10 a.m. Eastern Time / 9
a.m. Central Time to discuss this morning's announcement. Presentation materials
can be accessed through the SCI website at http://www.sci-corp.com. To
participate in the call, dial 866-425-6195, conference code 7228099.
International callers should dial 973-935-2981. The call will also be
simultaneously webcast on the Company's website at http://www.sci-corp.com.
A replay of the conference call will be available through April 10, 2006 and can
be accessed at 877-519-4471 with the confirmation code of 7228099. Additionally,
a replay of the conference call will be available on SCI's website for
approximately ninety days on the Investors page under the subheading "Conference
Calls" at http://www.sci-corp.com/ConfCalls.html. This press release will also
be available on SCI's website on the Investor Relations page under the
subheading "News" at http://www.sci-corp.com/InvestorsMenu.html.
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ABOUT SERVICE CORPORATION INTERNATIONAL
Service Corporation International, headquartered in Houston, Texas, is the
leading provider of funeral and cemetery services in the world. The Company has
an extensive network of businesses including 1,058 funeral service locations and
358 cemeteries in North America as of December 31, 2005. For more information
about Service Corporation International, please visit http://www.sci-corp.com.
ABOUT ALDERWOODS GROUP, INC.
Alderwoods Group, Inc. is the second largest operator of funeral homes and
cemeteries in North America, based upon total revenue and number of locations.
As of December 31, 2005, Alderwoods operated 594 funeral homes, 72 cemeteries
and 60 combination funeral home and cemetery locations throughout North America.
Alderwoods provides funeral and cemetery services and products on both an
at-need and pre-need basis. In support of the pre-need business, Alderwoods
operates insurance subsidiaries that provide customers with a funding mechanism
for the pre-arrangement of funerals. For more information about Alderwoods,
please visit http://www.alderwoods.com.
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
Forward-Looking Statements
Information set forth in this release contains forward-looking statements, which
involve a number of risks and uncertainties. Service Corporation International
("SCI") and Alderwoods Group, Inc. ("Alderwoods") caution readers that any
forward-looking information is not a guarantee of future performance and that
actual results could differ materially from those contained in the
forward-looking information. Such forward-looking statements include, but are
not limited to, statements about the benefits of the business combination
transaction involving SCI and Alderwoods, including future financial and
operating results, the combined company's plans, objectives, expectations and
intentions and other statements that are not historical facts.
The following factors, among others, could cause actual results to differ from
those set forth in the forward-looking statements: the ability to obtain
regulatory approvals of the transaction on the proposed terms and schedule; the
failure of Alderwoods stockholders to approve the transaction; the risk that the
businesses will not be integrated successfully; the risk that the cost savings
and any other synergies from the transaction may not be fully realized or may
take longer to realize than expected; disruption from the transaction making it
more difficult to maintain relationships with customers, employees or suppliers.
Additional factors that may affect future results are contained in SCI's and
Alderwoods's filings with the SEC, which are available at the SEC's web site
http://www.sec.gov. SCI and Alderwoods disclaim any obligation to update and
revise statements contained in these materials based on new information or
otherwise.
Additional Information About this Transaction
In connection with the proposed transaction, Alderwoods will file a proxy
statement with the SEC. INVESTORS ARE URGED TO READ THE PROXY STATEMENT WHEN IT
BECOMES AVAILABLE BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. You will be
able to obtain the proxy statement, as well as other filings containing
information about Alderwoods and SCI, free of charge, at the website maintained
by the SEC at
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www.sec.gov. Copies of the proxy statement and other filings made by the Company
with the SEC can also be obtained, free of charge, by directing a request to
Alderwoods Group, Inc., 311 Elm Street, Suite 1000, Cincinnati, Ohio 45202,
Attention: Corporate Secretary. Filings made by SCI with the SEC can also be
obtained, free of charge, by directing a request to Service Corporation
International, 1929 Allen Parkway, Houston, Texas 77019, Attention: Corporate
Secretary.
Participants in the Solicitation
The directors and executive officers of Alderwoods and SCI and other persons may
be deemed to be participants in the solicitation of proxies in respect of the
proposed transaction. Information regarding Alderwoods' directors and executive
officers is available in its annual proxy statement filed with the SEC on April
5, 2005. Information regarding SCI's directors and executive officers is
available in its annual proxy statement filed with the SEC on April 18, 2005.
Other information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the proxy statement and other relevant materials
to be filed with the SEC when they become available. Investors should read the
proxy statement carefully when it becomes available before making any voting or
investment decisions.
SERVICE CORPORATION INTERNATIONAL CONTACTS
Investors: Debbie Young - Director / Investor Relations
(713) 525-9088
Media: Greg Bolton - Director / Corporate Communications
(713) 525-5235
Steve Frankel/Jamie Moser
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
ALDERWOODS GROUP, INC. CONTACTS
Investors / Media: Kenneth A. Sloan - Executive Vice President, Chief
Financial Officer
(416) 498-2455
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