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Johns Manville OKs buyout
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June 23, 2000: 10:57 a.m. ET
Private buyers pay $2.4B for insulation maker owned by asbestos claims trust
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NEW YORK (CNNfn) - Building products maker Johns Manville Corp. agreed Friday to a $2.4 billion purchase by an investor group that will pay stockholders a cash premium as well as preferred stock for their shares.
The nation's No. 2 maker of insulation, behind Owens Corning, is 76 percent owned by a personal injury trust set up to pay asbestos claims in the coming decades. The trust and top management of the company will retain a stake in the company after the transaction, which is expected to close by the end of the year.
 The buyers -- which include an investor group led by affiliates of Hicks Muse Tate & Furst Inc. and Bear Stearns Merchant Banking -- will pay $13.625 cash for each Manville share, a premium of 11 percent over Thursday's closing price.
Shares of Johns Manville (JM: Research, Estimates) gained 3/4 to 13-1/16 in trading Friday morning.
The deal also will pay shareholders preferred stock in Johns Manville. The company's statement lists those shares' liquidation value at $2 each. Assumed debt and tax liability bring the value of the deal to $3 billion.
While trustees of the personal injury trust have agreed to the deal, it still is subject to regulatory approval.
"We believe our new capital structure will allow us to continue to support our business strategies and growth plans," Johns Manville Chairman and CEO Jerry Henry said. He will stay with the company after the transaction is completed.
The Manville Personal Injury Settlement Trust was created in 1988 to handle claims due to the company's past manufacture of asbestos. The liability from asbestos had forced Johns Manville into reorganization under bankruptcy protection laws in 1982. The reorganization and creation of the trust was approved by a federal bankruptcy court in 1986.
The trust was originally given a 50 percent stake in the company, along with common stock that it eventually exchanged for common stock. The trust has cash assets of about $947 million in cash, along with the Johns Manville shares.
"We have known, as the trust has known and the court has known all along, that the day would come when the trust would monetize its investment in Johns Manville and diversify its portfolio," said John Cummings, spokesman for the company.
Hicks Muse Tate & Furst is an 11-year-old private investment firm that has completed or has pending 370 transactions valued at $47 billion. 
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