Exhibit 99.1
WALTER INDUSTRIES TO ACQUIRE MUELLER WATER PRODUCTS, INC. FOR $1.91
BILLION
TAMPA, Fla., June 19 /PRNewswire-FirstCall/ -- Walter Industries, Inc. (NYSE:
WLT) announced today that it has entered into a definitive agreement to purchase
Mueller Water Products, Inc. ("Mueller") a privately held, leading supplier of
flow control products, for an aggregate value of approximately $1.91 billion.
The consideration will consist of approximately $860 million in cash and the
assumption of approximately $1.05 billion in Mueller debt, based on Mueller's
balance sheet as of April 2, 2005, subject to adjustments as provided in the
agreement. The acquisition complements the Company's U.S. Pipe subsidiary,
creating a major water infrastructure and piping systems company with leading
business positions, significant scale, and excellent prospects for growth.
The transaction is expected to be accretive by $0.20 to $0.24 per fully diluted
share in the first full year after closing; further, the estimated earnings
accretion excludes approximately $25 to $35 million of ongoing annual operating
synergies that are expected to be achieved within 24 months of the businesses
being combined. Upon closing, U.S. Pipe will, as a legal matter, become part of
Mueller, creating a separate wholly-owned public reporting subsidiary that will
have approximately $1.6 billion in revenues.
By establishing a separate reporting entity, the Company is creating a
subsidiary with meaningful scale, increasing the Company's flexibility to pursue
potential alternatives related to value creation at its other existing
businesses. These include Jim Walter Resources, the Company's strong performing
coal and natural gas unit. The Company recognizes the importance of capitalizing
on opportunities to take advantage of robust coal market conditions at the best
time and in the best manner to serve the interests of its shareholders.
As announced in February of this year, Don DeFosset, Chairman and CEO of Walter
Industries plans to retire. He has agreed to remain as Chairman and CEO until
his successor has joined the Company. DeFosset will lead the integration process
and assist in a smooth transition of leadership.
"Today's announcement is another important milestone in our shareholder value
creation program and a defining event in the development of our water systems
business," DeFosset said. "We have been tracking Mueller's growth and
compatibility with U.S. Pipe for some time, and we are excited to have the
opportunity to bring these businesses together. The complementary fit of
Mueller's water infrastructure and U.S. Pipe's water transmission business makes
us ideal partners, well positioned to benefit from increased water
infrastructure spending in North America." Dale B. Smith, Chief Executive
Officer of Mueller, and Ray Torok, President of U.S. Pipe, will continue to be
responsible for their respective businesses and will work together to achieve
synergies under the leadership of DeFosset and his successor.
Thompson Dean, Chairman of Mueller and Managing Partner of DLJ Merchant Banking
said, "We are extremely pleased at this outcome for the DLJ Merchant Banking
funds as well as the opportunities that this transaction creates for Walter
Industries and Mueller going forward."
Based in Decatur, Ill., Mueller is a leading North American full line supplier
of water infrastructure and flow control products for use in water distribution
networks, water and wastewater treatment facilities, gas distribution systems
and piping systems. Its principal products are fire hydrants, water and gas
valves, and a complete range of pipe fittings, coupling hangers and related
products. Mueller has earned a solid reputation for high quality products, with
respected brand names such as Mueller, James Jones, Hersey Meters, Henry Pratt
and Anvil. For the twelve-month period ending April 2, 2005, Mueller reported
annual sales, operating income, and net income of $1.1 billion, $138.1 million,
and $33.8 million, respectively.
Please refer to Mueller's Annual Report on Form 10-K and Quarterly Reports on
Forms 10-Q on file with the Securities and Exchange Commission for further
business and financial information. Mueller reports quarterly under SEC
regulations as a result of its publicly traded debt.
Transaction Conditions and Financing
The acquisition is expected to be completed in the third quarter of 2005,
subject to customary closing conditions, including the expiration or termination
of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act,
and the funding of the Company's committed financing. The requisite stockholders
of Mueller, DLJ Merchant Banking Partners II, L.P. and its affiliated investment
funds and Mueller's senior management have agreed to approve the merger.
The purchase price will be financed by new bank credit facilities arranged by
affiliates of Banc of America Securities LLC and Morgan Stanley & Co.
Incorporated, both of whom are advising Walter Industries in connection with the
acquisition. Simpson Thacher & Bartlett LLP is acting as the Company's outside
legal counsel in connection with the acquisition.
Financial Advisors Continue To Review Additional Opportunities
The Company also said it has been working with Banc of America Securities LLC
and Morgan Stanley & Co. Incorporated to advise it regarding additional
strategies to further maximize shareholder value. The Company said the timing
and structure of any strategic action would be based upon the financial
performance of its respective operating segments, market conditions, tax
consequences and other considerations, all of which will be fully analyzed in
order to determine the most appropriate time and means to deliver value to
shareholders.
The Company will discuss the Mueller transaction on a conference call on Monday,
June 20 at 8:30 a.m. ET/7:30 a.m. CT. The call will be web cast live and
available in a "listen-only" mode from the Company's website
http://www.walterind.com, where it will also be archived for 30 days. An
investor presentation discussing the transaction will be available on our web
site following the call. The presentation also will be archived for 30 days.
About Walter Industries
Walter Industries, Inc. is a diversified company with revenues of $1.5 billion,
excluding Mueller. The Company is a leader in affordable homebuilding, related
financing, and water transmission products, and is a significant producer of
high-quality metallurgical coal for worldwide markets. Based in Tampa, Fla., the
Company employs approximately 5,100 people. For more information about Walter
Industries, please call Joe Troy, Senior Vice President-Financial Services at
(813) 871-4404, or visit the Company's web site at http://www.walterind.com.
Forward-Looking Statements
Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
involve known and unknown risks and uncertainties that may cause the Company's
actual results in future periods to differ materially from forecasted results.
Those risks include, among others, changes in customers' demand for the
Company's products, changes in raw material, labor, equipment and transportation
costs and availability, geologic and weather conditions, changes in extraction
costs and pricing in the Company's mining operations, changes in customer
orders, pricing actions by the Company's competitors, the collection of
approximately $14 million of receivables associated with a working capital
adjustment arising from the sale of a subsidiary in 2003, potential changes in
the mortgage-backed capital market, and general changes in economic conditions.
Those risks also include the closing of the Mueller transaction and the timing
of and ability to execute on any strategic action that may be pursued. Risks
associated with forward-looking statements are more fully described in the
Company's filings with the Securities and Exchange Commission. The Company
assumes no duty to update its outlook statements as of any future date.
SOURCE Walter Industries, Inc.
-0- 06/19/2005
/CONTACT: Joseph J. Troy of Walter Industries, Inc., +1-813-871-4404; or
Ruth Pachman +1-212-521-4891, or Kimberly Kriger +1-212-521-4862, both of
Kekst and Company for Walter Industries, Inc./
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