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EXHIBIT 99.1
ARVIN AND MERITOR TO MERGE CREATING A $7.5 BILLION
LEADING GLOBAL AUTOMOTIVE SUPPLIER
TROY, MICH., and COLUMBUS, IND. (April 6, 2000) - Meritor Automotive, Inc.
(NYSE:MRA) and Arvin Industries, Inc. (NYSE:ARV) announced today that the two
companies have entered into a definitive agreement to combine their businesses
in a strategic merger of equals. The transaction will create a premier global
supplier of a broad range of integrated systems, modules and components for
light vehicle, commercial truck, trailer and specialty original equipment
manufacturers (OEMs) and related aftermarkets.
The new company, to be called ArvinMeritor, Inc., will have combined
revenues of $7.5 billion. It will be incorporated in Indiana and will have its
corporate headquarters in Troy, Mich. All its operating units will remain at
their current locations. The merger brings together two strong companies, which
by combining their financial and strategic strengths, complementary products and
businesses, technology and brand leadership, world-class operations, management
talent, and dedicated workforces, will strengthen their ability to better serve
their customers, add value for shareholders, and take advantage of global market
opportunities.
The combined product portfolio and technological expertise of the two
companies will support their goal of becoming a global provider of integrated
solutions for light and heavy vehicle undercarriage, drivetrain, exhaust and
aperture modules, and systems. The combination will also expand their light and
heavy vehicle systems product range and strengthen their presence in the
worldwide motor vehicle aftermarket.
Under the terms of the agreement, which has been approved by both boards
of directors, Arvin shareholders will receive 1.00 share of ArvinMeritor common
stock plus $2.00 of cash consideration for
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each share of Arvin common stock. Meritor shareholders will receive 0.75 shares
of ArvinMeritor common stock for each share of Meritor common stock. Meritor
shareholders will own approximately 65.8 percent and Arvin shareholders will own
approximately 34.2 percent of the combined company's shares.
ArvinMeritor expects to pay a quarterly cash dividend of $.22 per share
which is consistent with the current Arvin policy and reflects an increase to
the current Meritor policy. Except for cash received, the transaction will be
tax free to the shareholders of both companies, and the transaction will be
accounted for using the purchase method. The new company's fiscal year will end
September 30.
Larry Yost, 62, chairman and CEO of Meritor, will be the new company's
chairman and CEO, and Bill Hunt, 55, chairman and CEO of Arvin, will serve as
the new company's vice chairman and president. Together, they will comprise the
Office of the Chairman, which will directly oversee the company's corporate
staff functions, as well as the operations of its six business groups, which
include heavy vehicle systems, light vehicle systems, exhaust systems, light
vehicle aftermarket, heavy vehicle aftermarket and coil coating.
The board of directors of the new company will be comprised of nine
members from the current Meritor board and nine members from the current Arvin
board, plus one new independent director agreed upon by the parties. The
respective boards have a plan pursuant to which Bill Hunt will succeed Larry
Yost as chairman and CEO upon Yost's retirement from these positions.
"The new company represents a perfect fit between two outstanding
enterprises and management teams," said Larry Yost, chairman and CEO of Meritor.
"Each enterprise has an excellent track record of growing earnings and major
accomplishments over the past few years. This merger of equals allows all
shareholders to benefit from the opportunities created by sharing Arvin's and
Meritor's strong leadership teams and operational best practices. This type of
transaction enables us to not only preserve the current strengths of both
companies, but also to leverage those complementary strengths to our advantage,
as we strive to improve shareholder value and provide superior products and
better service to our customers in the future."
Bill Hunt, chairman and CEO of Arvin said, "We share a common vision and
culture, and there are many similarities in the way we have individually driven
our businesses in the pursuit of continuous improvement and greater shareholder
value. We are confident that together -- on a combined platform of total annual
revenues of $7.5 billion and operating cash flow of more than $400 million -- we
will deliver outstanding value to our shareholders, customers, employees and the
communities in which we operate. We will achieve our objectives through
accelerated top-line growth
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derived from product innovation, a focus on customer service, and the quick
realization of sales and cost-reduction synergies. Larry and I will be working
together to ensure that we realize the huge potential of our combined
businesses.
"We have established aggressive financial goals for ArvinMeritor, and are
confident in our ability to meet them," Hunt continued. "Our long-term financial
goals are to grow sales organically by 10 percent and earnings per share by 15
to 18 percent annually. We also are committed to managing ArvinMeritor as a
strong investment grade company, with an intense emphasis on cash. We expect the
merger to be accretive to net income in the first year with aggregate pre-tax
cost savings of approximately $50 million in fiscal 2001 and $100 million by
fiscal 2003."
Yost said, "As soon as all required approvals have been received and the
transaction closes, the new company's combined workforce of 36,500 -- in 25
countries and 121 manufacturing locations -- will begin to collectively solidify
outstanding customer relationships. We will continue to support our customers
globally, with differentiated products and services, innovative solutions and
leading-edge technologies.
"Both companies have proven track records of successfully integrating
acquisitions," Yost said. "To build on these positive experiences, we have
established a joint team to plan and execute the post closing integration of our
two companies. The team will meet weekly with the Office of the Chairman to
review the progress of the integration, which we expect will be complete within
a year after closing. The integration team will focus on adopting best practices
from each company, such as the Arvin Total Quality Production System (ATQPS) and
Meritor's strategic envisioning process and lean manufacturing initiatives. This
will ensure success in achieving synergies, resulting margin expansion and
continuous improvement of every process within ArvinMeritor."
The merger is subject to shareholder and regulatory approvals.
In addition to Bill Hunt and Larry Yost, other corporate officers of
ArvinMeritor will be:
Staff Functions:
- - Vernon G. Baker II, senior vice president, general counsel and secretary
- - Larry D. Blair, senior vice president, administration
- - Gary L. Collins, senior vice president, human resources
- - Lin M. Cummins, senior vice president, communications
- - Juan L. De La Riva, senior vice president, corporate development and
strategy
- - Thomas A. Madden, senior vice president and chief financial officer
- - William M. Lowe, vice president and controller
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- - A. R. Sales, vice president and treasurer
- - Diane M. Stelfox, vice president, corporate development
Operating Groups:
- - William K. Daniel, senior vice president and president, Light Vehicle
Systems, Aftermarket Products
- - Donald E. Ebert, senior vice president and president, Roll Coater, Inc.
- - Thomas A. Gosnell, senior vice president and president, Heavy Vehicle
Systems Aftermarket Products
- - Prakash R. Mulchandani, senior vice president and president, Heavy Vehicle
Systems
- - Terry E. O'Rourke, senior vice president and president, Light Vehicle
Systems
- - Carl C. Soderstrom, senior vice president, Engineering, Quality and
Procurement
- - Wesley B. Vance, senior vice president and president, Exhaust Systems
In connection with the transaction, each company granted the other an
option on up to 19.9% of its outstanding shares exercisable in certain
circumstances.
Warburg Dillon Read and Merrill Lynch Pierce Fenner & Smith, Inc. have
acted as primary financial advisors and have issued fairness opinions to Meritor
and Arvin, respectively, in connection with this merger. In addition, Bear
Stearns and Lehman Brothers have acted as financial co-advisors to Meritor and
Arvin, respectively.
Meritor, with 1999 sales of $4.5 billion, is a global supplier of a broad
range of components and systems for commercial, specialty and light vehicle OEMs
and the aftermarket. Meritor consists of two businesses: Heavy Vehicle Systems,
a leading supplier of complete drivetrain systems and components for medium- and
heavy-duty trucks, trailers, and off-highway equipment and specialty vehicles,
including military, bus and coach, and fire and rescue; and Light Vehicle
Systems, a major supplier of roof, door, automotive body, access control and
suspension systems, and wheel products for passenger cars, light trucks and
sport utility vehicles. Meritor World Wide Web Site Address: www.meritorauto.com
Arvin Industries, Inc., with 1999 sales of $3.1 billion, is a global
manufacturer of automotive components with more than 60 manufacturing facilities
and six technical centers located in 22 countries. Arvin is a leading
manufacturer of automotive exhaust systems; ride control products; air, oil and
fuel filters; and gas-charged lift supports. Their products are sold under
various trademarks including Arvin, Maremont, Timax, ANSA and ROSI exhaust
systems; Gabriel and
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RydeFX shock absorbers; Purolator filters; and StrongArm gas-charged lift
supports. Arvin Industries World Web Site Address: www.arvin.com
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This news release contains "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those projected as a result of certain risks and uncertainties,
including but not limited to those detailed from time to time in Meritor's and
Arvin's Securities and Exchange Commission filings. Such risks and uncertainties
also include: materially adverse changes in economic conditions in the markets
in which the companies operate; costs related to the merger; substantial delay
in the expected closing of the merger; and the risk that Meritor's and Arvin's
businesses will not be integrated successfully.
Meritor and Arvin plan to file a joint proxy statement/prospectus and
other relevant documents concerning the merger with the Securities and Exchange
Commission (the "Commission"). WE URGE INVESTORS AND SECURITYHOLDERS TO READ THE
JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED
WITH THE COMMISSION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors
and securityholders will be able to obtain free copies of these documents at the
Commission's website at www.sec.gov. In addition, documents filed with the
Commission by Meritor will be available free of charge from Meritor (at
Meritor's website at www.meritorauto.com) or by contacting Bonnie Wilkinson,
Meritor Automotive, Inc., 2135 W. Maple Road, Troy, Mich. 48084; telephone (248)
435-0762. Documents filed with the Commission by Arvin will be available free of
charge from Arvin (at Arvin's website at www.arvin.com) or by contacting Ronald
R. Snyder, Arvin Industries, Inc., One Noblitt Plaza, Columbus, Ind. 47202;
telephone (812) 379-3982.
INVESTORS AND SECURITYHOLDERS SHOULD READ THE JOINT PROXY
STATEMENT/PROSPECTUS CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.
Meritor, Arvin and their respective officers and directors may be deemed
to be participants in the solicitation of proxies from their shareholders with
respect to the transactions contemplated by the agreement and plan of
reorganization. Information concerning the participants in the solicitation will
be set forth in the joint proxy statement/prospectus when it is filed with the
Commission.
Meritor and Arvin will host a conference call to discuss the proposed
merger. The call will take place today, April 6, 2000 at 10:30 a.m. (eastern
time). Investors and interested parties can listen to the call by dialing (800)
430-8615 (domestic) or (212) 271-4750 (international) five minutes prior to the
call.
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The code is "Corporate Merger". It will also be available for playback for ten
business days beginning at 1:00 p.m. today, by dialing (800) 633-8284 (domestic)
or (858) 812-6440 (international) and giving reservation #14905961, your name
and company.
Investors and interested parties can download a PowerPoint presentation
prior to the call, by visiting Meritor's website (www.meritorauto.com) and
clicking on Investor Relations, or by visiting Arvin's website (www.arvin.com)
and clicking on Investor Center.
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