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EXHIBIT 99.1
NEWS RELEASE [PARKER LOGO]
DATE: JANUARY 17, 2000
FOR RELEASE: IMMEDIATELY
CONTACT:
PARKER CONTACTS: COMMERCIAL INTERTECH CONTACTS:
Analysts:
Tim Pistell, Treasurer Steven Hewitt, Senior Vice President & CFO
(216) 896-2130 (330) 740-8555
News Media:
Lorrie Paul Crum Bruce Wheatley
(216) 896-2750 (330) 740-8580
Vice President, Senior Vice President, Administration
Corporate Communications
Jodi Bennett Jim Cartwright
(216) 896-3258 (330) 740-8229
Manager, Integrated Communications Manager, Corporate Communications
Note: On Jan. 17, all of the media contacts noted above may be reached at (330)
740-8550.
PARKER AND COMMERCIAL INTERTECH ANNOUNCE $366 MILLION MERGER
COMBINATION ENHANCES PARKER'S POSITION
AS WORLD'S LEADING SUPPLIER OF MOTION-CONTROL SYSTEMS
CLEVELAND and YOUNGSTOWN, OHIO January 17, 2000 - Parker Hannifin Corporation
(NYSE:PH) and Commercial Intertech Corp. (NYSE: TEC) today announced that their
Boards of Directors have unanimously approved a definitive agreement to merge in
a cash-and-stock transaction with an equity value of approximately $366 million.
In addition, Parker will assume approximately $107 million of Commercial
Intertech debt.
Under the terms of the merger agreement, Parker will acquire all outstanding
stock of Commercial Intertech for $20.00 per share in Parker common stock,
subject to a collar. This represents a 55-percent premium over Commercial
Intertech's average closing price for the past 20 trading days. Commercial
Intertech shareholders will receive Parker common stock based on an exchange
ratio that will be determined by the 20-day average of Parker's closing price
five days immediately preceding the closing date. Commercial Intertech
shareholders may elect to receive $20.00 per share in cash, subject to a maximum
49 percent of total shares. The transaction will be tax-free to those who elect
to convert their Commercial Intertech shares to Parker common stock.
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The merger is anticipated to close during the quarter ending June 30, 2000.
Based on current market values and consensus estimates, the combination is
expected to be 2.5 percent to 5 percent accretive to Parker's earnings in the
first full fiscal year ending June 30, 2001. Parker plans to account for the
transaction as a purchase.
STRATEGIC FIT
The merger furthers Parker's strategy to offer the most complete range of
motion-control systems to customers in its industrial, mobile, commercial and
aerospace markets. Those served by the combination will gain the benefits of
one-stop shopping and a simplified bill of materials.
With their respective, complementary strengths -- Parker in industrial markets
and Commercial in mobile applications -- the two companies' product lines have
very little overlap. In this respect, the merger presents meaningful growth and
cross-selling opportunities for both companies. Parker customers will gain
expanded capabilities in mobile hydraulics, while Commercial Intertech customers
will have access to a far greater range of motion-control components, systems
and solutions. These expanded offerings will be available to customers in kits,
from a single source.
The companies' ability to market a complete selection of advanced motion-control
technologies will be unrivaled, and in demand by a variety of industries,
including truck equipment and transportation; construction; refuse and material
handling; and agriculture and turf care. For example, refuse-vehicle
manufacturers now will be able to purchase a package that includes hydraulic
telescoping cylinders, gear pumps, control valves and electronics, as well as
Parker's fluid connectors, filters and seals.
"Commercial Intertech is a great fit with our growth model and long-term
strategy of being the premier provider of complete motion and control systems,"
said Duane Collins, Parker Chairman and CEO. "We are an excellent fit
strategically and culturally. We've known one another as neighbors for decades,
and because we share a tradition of community involvement and charitable giving,
we are looking forward to counting Youngstown among our home communities."
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"Commercial Intertech is our kind of company: built by resourceful people who
work hard and manage prudently; known for producing first-rate products and
pioneering technology. For these strengths, Commercial has been rewarded with
shareholder constancy and customer loyalty. All of these are qualities we value
and we want Commercial Intertech, as part of Parker, to continue to function
very much as it always has. Just as we have done successfully in past
combinations, we will build on this business and the achievements of its
employees. For them, as much as for our customers and shareholders, our focus
will be on growth, and achieving even greater value together."
Collins noted that Parker has acquired 42 businesses in the last six years,
totaling $1.1 billion in first-year sales. "We have a very effective,
well-tested process for integration and growth. We're known for building the
businesses we buy, and we'd like to welcome Commercial's shareholders and
employees to share in our record of success, for years to come."
"This transaction offers tremendous benefits for our many constituencies
including shareholders, employees, customers and communities served by
Commercial Intertech," said Paul Powers, Chairman and CEO of Commercial
Intertech. "Parker's global marketing reach and respected position in the
markets it serves expand Commercial Intertech's opportunities to leverage our
products into new markets. The combined businesses will offer global customers a
single source of supply for integrated motion and control systems for mobile,
industrial and aerospace applications. This transaction creates both short- and
long-term benefits for Commercial Intertech shareholders, who will receive
immediate value for their shares and who will be able to participate in the
upside potential of the combined company as Parker shareholders. This
combination is a `win-win' transaction for every stakeholder in Commercial
Intertech."
"Parker has consistently demonstrated in its acquisitions that it values quality
businesses and quality people. That track record represents a positive
opportunity for the men and women of Commercial Intertech in our operations
around the world," Powers added. "Furthermore, Parker recognizes the importance
of maintaining strong ties and honoring commitments with all of its
constituencies, including the communities in which it has operations. We are
pleased that in the merger agreement, Parker expressly agreed to continue the
level and type of Commercial Intertech's charitable giving and
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community involvement, for at least five years. Certainly, Parker's history of
success and care in managing the human side of acquisitions is one of the many
positives that have made us very enthusiastic about this combination."
The companies expect to achieve pretax synergies of $15 to $20 million per year
by the end of the second full year of integration, with the majority of the
savings expected in the first year. Key areas for achieving these benefits
include improved purchasing leverage; geographic extension; coordination of
marketing and sales efforts and cross-selling; integration of administrative
functions; and the establishment of common business processes and systems. In
addition, Parker expects be able to utilize $120 million in tax-loss
carry-forwards.
CORPORATE STRUCTURE
The Commercial Intertech Hydraulics business will be integrated with Parker's
Hydraulics Group to significantly enhance both the Group's competitive position,
and Parker's overall strength as the world leader in motion and control
technologies. Additionally, Parker will manage Commercial Intertech's Building
Systems and Metal Forming businesses as separate units.
The transaction is subject to normal regulatory reviews and the approval of
Commercial Intertech shareholders. Both companies expect to continue their
quarterly dividend policies until the close of the transaction. Parker has
increased its dividend for 43 consecutive years, while Commercial Intertech has
paid dividends for 66 years.
Salomon Smith Barney acted as financial advisor and provided a fairness opinion
to Parker, while Goldman Sachs & Co. acted as financial advisor and provided a
fairness opinion to Commercial Intertech.
With annual sales approaching $5 billion for fiscal year ended June 30, Parker
Hannifin Corporation is the world's leading diversified manufacturer of motion
and control technologies, providing systematic, precision-engineered solutions
for a wide variety of commercial, mobile, industrial and aerospace markets. The
company employs nearly 40,000 people in 39 countries around the world. For more
information, visit the company's web site at www.parker.com.
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Commercial Intertech, which posted sales of $535 million for the fiscal year
ended October 31, 1999, is an international manufacturer comprising three
business groups -- Commercial Hydraulics, Astron Building Systems, and
Commercial Metal Forming. Headquartered in Youngstown, Ohio, where it was
founded in 1920, the company operates 27 facilities in seven countries and
employs nearly 4000 people.
FORWARD-LOOKING STATEMENTS:
Forward-looking statements contained in this and other written and oral reports
are made based on known events and circumstances at the time of release, and as
such, are subject in the future to unforeseen uncertainties and risks. All
statements regarding future performance, events or developments, including
statements related to earnings accretion and synergies to be realized in the
merger, are forward-looking statements. It is possible that the company's future
performance may differ materially from current expectations expressed in these
forward-looking statements, due to a variety of factors such as changes in:
business relationships with and purchases by or from major customers or
suppliers; competitive market conditions and resulting effects on sales and
pricing; increases in raw-material costs which cannot be recovered in product
pricing; global economic factors, including currency exchange rates and
difficulties entering new markets; failure of the merger to be consummated;
ability to successfully integrate Commercial Intertech's business with Parker's;
and factors noted in the companies' reports filed with the U.S. Securities and
Exchange Commission.
Note to Editors: Today's news release, along with other background information,
is available at a special web site created by the companies, accessible from
Parker's home page, at http://www.parker.com.
At 10:30 a.m. EST, the companies will jointly host a news conference at the
Youngstown Club, 201 East Commerce Street, Youngstown. Members of the media who
are unable to attend may dial-in to listen to the news conference.
This is a listen-only mode.
To access the call, dial: 888/422-7116, THEN ENTER THE PARTICIPANT CODE: 740188.
Executives in attendance will include:
- - Duane Collins, Chairman and CEO, Parker Hannifin
- - Paul Powers, Chairman and CEO, Commercial Intertech
- - Mike Hiemstra, Vice President and CFO, Parker Hannifin
- - Steven Hewitt, Senior Vice President and CFO, Commercial Intertech
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- - Don Washkewicz, President, Parker Hydraulics Group
- - Lorrie Paul Crum, Vice President - Corporate Communications,
Parker Hannifin
- - Bruce Wheatley, Senior Vice President - Administration, Commercial
Intertech
SATELLITE UPLINK FOR B-ROLL:
Monday, January 17, 2000
9-9:30 a.m. EST and 2:30 - 3 p.m. EST
Coordinates: Telstar 4, Transponder 6, C-Band
If you have any technical questions or problems with the satellite feed, please
call Sharon Sullivan, Orbis News, at (312) 942-1199, extension 191.
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PHNR-9917