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SPX to buy Gen'l Signal
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July 20, 1998: 6:00 a.m. ET
Auto parts maker set to acquire industrial company for $2B
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NEW YORK (CNNfn) - Auto-parts maker SPX Corp. announced Monday that it is acquiring industrial company General Signal Corp. for about $2 billion in stock and cash.
Both companies' boards have approved a transaction worth $45 a share in stock and cash that would create a company with $2.5 billion in sales in industrial and automotive businesses.
With the deal, Muskegon, Mich.-based SPX is using its rich stock price to acquire a company almost twice its size in sales. SPX had 1997 sales of just under $1 billion, while Stamford, Conn.-based General Signal, a maker of industrial and electrical controls, reported 1997 revenue of $1.95 billion.
SPX used a similar strategy in its $3 billion hostile bid for rival auto-parts maker Echlin Inc. (ECH) earlier this year, but was outbid by Dana Corp. (DCN).
Under the terms of the transaction, given the size difference between the two companies, General Signal shareholders would end up owning about 60 percent of the combined company's shares. SPX is said to be offering 60 percent in stock and 40 percent in cash, though shareholders may elect to take all stock. SPX would assume $335 million of General Signal debt.
SPX has made no secret of its desire to grow through acquisitions and has told analysts that it may end up finding a "second platform" with which to grow rather than expanding further in the automotive and tools business.
SPX (SPW) shares closed at 64-1/2 in Friday trading, down 3/4. Shares of General Signal (GSX) finished up 1-9/16 to close at 37-5/8.
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SPX
General Signal
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