EXHIBIT K
Varlen Corporation, 55 Shuman Blvd., P.O. Box 3089, Naperville, Illinois
60566-7089
(708)420-0400 FAX (708)420-7123
CONTACT:
Richard L. Wellek, President & CEO or
Richard A. Nunemaker, Vice President & CFO
Varlen Corporation (708) 420-4000
Jacob M. Feichtner, Executive Vice President
& CFO
(804) 378-2902
Needham B. Whitfield, Chairman & CEO
Brenco, Incorporated (804) 378-2900
VARLEN ENTERS INTO DEFINITIVE AGREEMENT TO BUY
BRENCO THROUGH $165 MILLION CASH TENDER OFFER
MERGER WOULD CREATE PREEMINENT RAILROAD EQUIPMENT MANUFACTURER WITHIN VARLEN
NAPERVILLE, Ill., June 17, 1996 -- Varlen Corporation (NASDAQ:VRLN) and
Brenco, Incorporated (NASDAQ:BREN) of the Richmond, Va. area, today announced a
definitive agreement for Varlen to buy Brenco in a $165 million cash tender
offer, creating within Varlen a preeminent global manufacturer of precision
engineered railroad products that is well-positioned to capitalize on growing
international interest in American freight railroad technologies.
The merger would transform Varlen into a company with approximately $500
million in 1997 annual sales and 3,200 employees with manufacturing facilities
in 13 states, as well as Germany and France, and would substantially increase
railroad products revenue. The acquisition is anticipated to add up to 7 cents
per share to fiscal 1996 earnings based on a late July closing.
"Varlen and Brenco are a great strategic fit," said Richard L. Wellek,
Varlen's president and chief executive officer. "Varlen has enjoyed excellent
long-term growth on the strength of our current businesses. This combination
will help us grow faster in our railroad and automotive markets. This continues
our corporate focus on manufacturing highly-engineered transportation products
and analytical instruments, maintaining niche market leadership, and expanding
our international presence."
Terms of the agreement approved by both boards of directors include prompt
commencement, through a wholly-owned Varlen subsidiary, of a tender offer at a
price of $16 1/8 for each outstanding share of Brenco common stock. The tender
offer requires that Varlen will be able to obtain at least two-thirds of the
shares at the expiration of the offer, which is scheduled to remain open for 20
business days. An offer to purchase containing all of the terms and conditions
will be mailed to Brenco shareholders in the next few days. The agreement
contemplates that shares not tendered would be acquired at the same price
through a merger. Brenco has approximately 10.2 million shares outstanding.
Persons related to Brenco's founding family -- including Needham B. Whitfield,
Brenco's chairman, and his sister Anne Whitfield Kenny -- control approximately
20 percent of the stock and have signed a separate shareholder tender agreement
with Varlen.
"At a premium of 32% over the closing price for Brenco shares Friday, I
believe Varlen's offer will be well received by Brenco shareholders," said
Brenco's chairman and chief executive officer, Needham B. Whitfield. "We feel
very comfortable entrusting Brenco's dedicated employees and position of
leadership in the railroad bearing market to a company of Varlen's caliber and
reputation. The cultures of the two companies are extremely compatible. Varlen
understands our markets -- both in the automotive and in the railroad industries
- -- and supports our market strategies of continual product innovation and
outstanding customer service. Most important for our future, Varlen is prepared
to invest in our plans for growth."
After the merger, Brenco would continue to be based in the Richmond area and
would become a wholly-owned subsidiary of Varlen. J. Craig Rice would remain as
Brenco president.
Varlen has been a manufacturer of railroad products since its founding.
Wellek said potential synergies between the two companies should create future
growth opportunities in railroad equipment. "We will have a stronger and more
diverse family of products for the railroad industry, as well as the ability to
leverage greater sales overseas," he said.
Brenco is a leading manufacturer and re-conditioner of tapered roller
bearings for freight cars, for both the domestic and overseas markets. Other
Varlen subsidiaries make railcar shock control devices, outlet gates, locomotive
products and track fastening devices.
Varlen, headquartered in Naperville, Illinois, is a leading manufacturer of
precision engineered transportation products and analytical instruments for the
railroad, heavy-duty truck and trailer, automotive and petroleum industries.
Varlen's customers include Freightliner, PACCAR, General Motors, Chrysler and
TTX. The company had 1995 annual sales of $387 million.
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MORE INFORMATION ON VARLEN AND BRENCO CAN BE FOUND ON THE CHLOPAK, LEONARD,
SCHECHTER SITE ON THE WORLD WIDE WEB AT HTTP://CLSDC.COM/NEWS/VARLEN.