FOR IMMEDIATE RELEASE
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SPX CONTACTS: GENERAL SIGNAL CONTACTS:
INVESTORS Richard F. Zannino
Charles A. Bowman EVP/Chief Financial Officer
Director of Corporate Finance (203) 329-4303
(616) 724-5194
Nino Fernandez
MEDIA Vice President, Investor Relations
George Sard/Paul Caminiti/Heather Reeves (203) 329-4320
Sard Verbinnen & Co
(212) 687-8080
SPX TO ACQUIRE GENERAL SIGNAL FOR $45 PER SHARE, OR $2.0 BILLION
WILL CREATE A STRONG $2.5 BILLION INDUSTRIAL AND VEHICLE SOLUTIONS COMPANY
WILL APPLY PROVEN EVA(R)-BASED PROGRAM TO CREATE SHAREHOLDER VALUE;
CASH-AND-STOCK ACQUISITION EXPECTED TO BE ACCRETIVE TO EPS
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MUSKEGON, MI AND STAMFORD, CT, JULY 20, 1998 -- SPX Corporation (NYSE:
SPW) and General Signal Corporation (NYSE: GSX) today jointly announced
that their Boards of Directors have approved a definitive agreement for SPX
to acquire General Signal for cash and SPX shares currently valued at $45
per General Signal share, or a total of approximately $2.0 billion. SPX
will also assume approximately $335 million in General Signal net debt. The
purchase price represents a 20% premium for General Signal shareholders,
based on the closing stock prices of both companies last Friday
Under the terms of the cash-election merger, General Signal
shareholders will receive 60% SPX stock and 40% cash in the aggregate, with
each shareholder able to choose among three options - all cash, all SPX
stock or a 60/40 stock/cash combination, subject to proration. The
all-stock election will be based on a fixed exchange ratio of 0.6977 SPX
shares per General Signal share and the 60/40 stock/cash election will be
based on a fixed exchange ratio of 0.4186 SPX shares per GSX share.
A $1.7 billion facility underwritten by Chase Manhattan Bank will be
used to finance the cash portion of the acquisition and to refinance
existing debt. The transaction, which is subject to shareholder approvals,
antitrust clearance and other customary conditions, is expected to close
early in the fourth quarter of 1998. General Signal has agreed not to pay a
third quarter dividend.
SPX expects the acquisition to be accretive to earnings per share in
1999 and to significantly increase cash flow. SPX expects to achieve annual
cost savings of $55-60 million, starting in the first year. SPX plans to
continue to rationalize General Signal's portfolio of 15 businesses and
accelerate implementation of Economic Value Added(R)-based compensation
programs.
SPX Chairman, President and CEO John B. Blystone said, "We are very
excited about combining SPX and General Signal to create a strong
industrial and vehicle solutions company which will give us a larger
platform to increase shareholder wealth. SPX's leadership team intends to
apply our proven EVA-based management techniques to create value in General
Signal's businesses, as we've done at SPX. Shareholders of both companies
should benefit from this transaction, which is immediately accretive to EPS
and forms a company with tremendous potential. General Signal shareholders
will receive a premium in cash and SPX's stock and SPX shareholders will
own part of a much larger company with increased value-creation
opportunities. In addition, the combined company will have the financial
strength to invest in its current businesses and pursue strategic
acquisitions to fuel further growth."
Michael D. Lockhart, General Signal's Chairman and CEO, stated, "SPX
is a solid company with an impressive management team that has quadrupled
SPX's stock price in just two and a half years. General Signal shareholders
will own 60% of the expanded SPX and benefit from greater critical mass and
the opportunity to share in the upside of the combined entity."
Blystone will continue as Chairman, President and CEO of the combined
company, which will retain the SPX name and headquarters. Two General
Signal directors, Emerson Fullwood, a Corporate Vice President at Xerox
Corporation, and H. Kent Bowen, Professor of Technology and Operations
Management at Harvard University Graduate School of Business
Administration, will join the SPX Board of Directors.
Blystone added, "SPX already manages a range of vehicle solutions
businesses, focusing on those with leading market positions capable of
returning more than the cost of capital. General Signal is comprised of 15
businesses, one in the vehicle components sector and the other 14 in
process equipment, electrical products and network technology. Most of
these industrial solutions businesses are #1 or #2 in their markets or have
strong niche positions that will fit nicely into the SPX model. As we did
at SPX, we will work to eliminate duplicate corporate costs, achieve
operating efficiencies, enhance productivity, extend EVA-based compensation
and improve customer quality and service. We're confident that we can
utilize our leadership experience and management techniques to achieve
superior growth and profitability for the combined company. We will build
on Mike Lockhart's excellent work and look forward to working with the many
talented people throughout the General Signal organization."
The new SPX will have pro forma annual revenues of approximately $2.5
billion balanced between industrial and vehicle solutions businesses,
strong cash flow, and substantial cost-saving opportunities. SPX's plan to
improve performance at General Signal will be patterned after SPX's own
turnaround, where operating margins have nearly doubled and more than 80%
of employees have compensation tied to improvement in EVA.
General Signal will withdraw its previously announced plan to spin off
the GS Networks business to General Signal shareholders. SPX plans to
retain and grow this attractive business.
Joel Stern, Managing Partner of Stern Stewart & Co., stated, "SPX will
have an opportunity to again demonstrate its ability to utilize EVA to
drive cultural change and increase shareholder wealth at General Signal."
SPX received a fairness opinion from Stern Stewart & Co. and was
advised by Chase Securities Inc. General Signal was advised by Lazard
Freres & Co. LLC.
General Signal Corporation is a leading manufacturer of quality
products for the process control, electrical control and industrial
technology industries worldwide. General Signal's Internet address is
www.generalsignal.com.
SPX Corporation is a global provider of Vehicle Service Solutions to
franchised dealers and independent service locations, Service Support to
vehicle manufacturers, and Vehicle Components to the worldwide motor
vehicle industry. SPX's Internet address is www.spx.com.
Statements in this press release that are not strictly historical are
"forward looking" statements within the meaning of the Safe Harbor
provisions of the federal securities laws. Investors are cautioned that
such statements are solely predictions and speak only as of the date of
this release. Actual results may differ materially due to risks and
uncertainties that are described in the SEC filings of both companies.
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