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ArvinMeritor Announces Plan to Spin Off Light Vehicle Systems Business to Shareholders
TROY, Mich. (May 6, 2008)
— ArvinMeritor, Inc. (NYSE: ARM)
today announced that its board of directors has approved a plan to spin off its
Light Vehicle Systems (LVS) business to ArvinMeritor shareholders, with the
Commercial Vehicle Systems (CVS) business remaining with ArvinMeritor.
“The plan to separate our two businesses is the result of a comprehensive
strategic review to enhance the company’s long-term value for our
shareholders,” said Chip McClure, chairman, CEO and president. “We
are confident that this transaction will not only unlock shareholder value, but
will also significantly strengthen the competitive positions of both companies
and better align them with their respective customer bases.
“Each company will benefit from a greater strategic focus on its core
business and growth opportunities as well as from increased recognition in each
of its global market segments. In addition, the separate companies will offer
more attractive and targeted investment opportunities, with incentives for management
and employees that are more closely aligned with company performance and
shareholder interests,” continued McClure.
The planned spinoff of the LVS business – to be named Arvin Innovation,
Inc. – would be implemented through a pro rata tax-free dividend to
ArvinMeritor shareholders. Upon completion of the spinoff, ArvinMeritor
shareholders will own 100 percent of the common stock of Arvin Innovation.
Approval of the spinoff by ArvinMeritor shareholders is not required, and the
company expects to complete the spinoff within the next 12 months, contingent
upon satisfactory financial and automotive market conditions as well as other
customary approvals.
“Our decision to spin off the LVS business is part of the company’s
ongoing corporate transformation – our 3R strategy to rationalize,
refocus and regenerate – that has been underway for the last three
years,” McClure said. “Separating these two businesses and
successfully implementing our Performance Plus initiatives are major steps in the
transformation to build two stronger, more competitive companies for the
future.
“Our LVS business group will have the right leadership team, a solid
financial structure, market-leading positions in many of its product lines, a
well-diversified customer mix and the global reach to grow this new company as
a market leader going forward,” McClure concluded.
McClure will remain as ArvinMeritor’s chairman, CEO and president. James
Marley, currently a board member of ArvinMeritor, will lead Arvin
Innovation’s board of directors as non-executive chairman. Until the spin
is completed, Marley, a retired chairman of the board of AMP Inc., will remain
on the ArvinMeritor board. Phil Martens, currently ArvinMeritor’s senior
vice president and president, Light Vehicle Systems, will become the president
and CEO of Arvin Innovation.
“As a separate independent unit, Arvin Innovation will be better
positioned to drive specific growth initiatives, including improving our
customer focus and expanding our global presence,” said Martens.
“With increased flexibility as a stand-alone business, Arvin Innovation
will have an excellent opportunity to create next-generation systems technology
solutions for our customers around the world. In addition, we look forward to
the many new and enhanced opportunities the new organization will provide for
our worldwide employees.”
Jim Donlon, executive vice president and CFO of ArvinMeritor will immediately
begin supporting ArvinMeritor’s LVS business group in the capacity of
chief financial officer as it prepares to become an independent company. Upon
completion of the spin, he will become executive vice president and CFO of
Arvin Innovation.
Jay Craig, senior vice president and controller, will replace Donlon as
ArvinMeritor’s senior vice president and CFO, effective immediately.
Rakesh Sachdev, senior vice president of ArvinMeritor and president of Asia
Pacific, will become executive vice president, chief administrative officer and
managing director of Emerging Markets of the new company, upon the completion
of the spin. However, until a successor is named, he will continue to be
responsible for ArvinMeritor’s Asia Pacific region.
When the spinoff is completed, Carsten Reinhardt, senior vice president of
ArvinMeritor and president of the company’s Commercial Vehicle Systems
business, will be named COO for ArvinMeritor.
In addition, Mary Lehmann, currently the company’s senior vice president,
Strategic Initiatives, and Treasurer, will expand her responsibilities to
include Information Services, M&A activities, and Investor Relations.
Vernon Baker, currently senior vice president and general counsel, with overall
legal responsibility for all of ArvinMeritor’s global operations and its
subsidiaries, and Environmental, Health and Safety, will also assume
responsibility for the global Human Resources organization.
ArvinMeritor will remain headquartered in Troy, Mich. Arvin Innovation will be
headquartered in Detroit, Mich., at the current location of the LVS Detroit
Technology Center, with other corporate offices located in Europe, Asia Pacific
and South America.
The spinoff is subject to customary conditions, including final approval by
ArvinMeritor’s board of directors; completion of all required activities
with employee representatives; receipt of applicable consents; effectiveness of
a registration statement with the Securities and Exchange Commission; receipt
of a tax ruling from the IRS; and the approval of applicable regulatory
authorities.
ArvinMeritor’s common stock will continue to trade on the New York Stock
Exchange under the symbol ARM. We
have applied for Arvin Innovation to be listed on the NASDAQ global stock
market under the symbol ARVI.
Until the spinoff is effective, ArvinMeritor’s management intends to
recommend that its board continue its current dividend policy.
J.P. Morgan Securities Inc. is ArvinMeritor's lead financial advisor for this
transaction. UBS Securities is also advising ArvinMeritor on financial matters
relating to the transaction. Chadbourne & Parke LLP as well as Miller,
Canfield, Paddock and Stone, P.L.C. are acting as ArvinMeritor’s legal
advisors.
Light Vehicle Systems
ArvinMeritor’s LVS business is a leading global provider of dynamic
motion and control automotive systems and components, with sales of $2.2
billion in 2007 – $2.0 billion of value-added sales and $200 million of
pass-through sales. Of the value-added sales, more than 60 percent were outside
North America. ArvinMeritor’s LVS
business group is a market leader in many of the product categories it serves,
supplying components and integrated systems and modules to the world’s
leading passenger car and light truck OEMs.
Through smart systemsTM technologies, the intelligent application of
controls and electronics, LVS’ traditional mechanical products are taking
on new form and function at both the component and system levels. With
advanced technology and systems design expertise – in body systems (roof,
and door modules and systems, motors, latches, window regulators, and electronic
controls); and chassis systems (chassis and suspension modules and systems,
ride control products, electronic chassis control systems, global aftermarket
chassis products and wheels) – LVS produces integrated, high-quality,
cost-effective performance-based solutions for practically all car and light
truck market segments.
The business will have approximately 9,000 employees with 42 facilities in 16
countries. LVS has interests in eight joint ventures (three consolidated
and five non-consolidated).
Commercial Vehicle Systems
Upon completion of the spinoff, ArvinMeritor will continue as a market leader
in the commercial vehicle systems business. ArvinMeritor’s commercial
vehicle business is a leading supplier of drivetrain components and systems, including
axles and drivelines, braking systems, suspension systems and ride control
products for heavy- and medium-duty trucks, trailers, buses, off-highway and
military vehicles as well as to the commercial vehicle aftermarket.
The CVS business will have 62 global locations, including manufacturing
facilities, technical centers, warehouses and administrative offices. CVS has
approximately 10,000 employees in 15 countries. In 2007, the CVS business
recorded sales of more than $4.2 billion. CVS has interests in eleven joint
ventures (five consolidated and six non-consolidated).
Call-In Detail
ArvinMeritor will host a conference call and Web cast on Tuesday,
May 6, 2008, at 8 a.m. (ET). To participate, call (617) 213-4847, ten minutes
prior to the start of the call. Please reference Passcode 30588392 when dialing
in.
Investors and media can also listen to the conference call for seven days by
recording by visiting www.arvinmeritor.com. A replay of the call will be
available from 10:00 a.m. Tuesday, May 6 until 11:59 p.m. Tuesday, May 13 by
calling (888) 286-8010 within the United States
and Canada,
or (617) 801-6888 international callers. Please reference Passcode 54756165.
To access the listen-only audio Web cast, visit the ArvinMeritor Web site at
www.arvinmeritor.com and select the Web cast link from the home page or the
investor page.
About ArvinMeritor
Today, ArvinMeritor, Inc. is a premier global supplier of a broad
range of integrated systems, modules and components to the motor vehicle
industry. The company serves commercial truck, trailer and specialty original
equipment manufacturers and certain aftermarkets, and light vehicle
manufacturers. Headquartered in Troy,
Mich., ArvinMeritor employs
approximately 19,000 people in 24 countries. ArvinMeritor common stock is
traded on the New York Stock Exchange under the ticker symbol ARM. For more information, and high
resolution photography, visit the company's Web site at:
http://www.arvinmeritor.com/.
Forward-Looking Statements
This press release contains
statements relating to future results of the company (including certain
projections and business trends) that are “forward-looking
statements” as defined in the Private Securities Litigation Reform Act of
1995. Forward-looking statements are typically identified by words or
phrases such as “believe,” “expect,”
“anticipate,” “estimate,” “should,”
“are likely to be,” “will” and similar
expressions. There are risks and uncertainties relating to the planned
spin-off of ArvinMeritor’s LVS business, including the timing and
certainty of completion of the transition. In addition, actual results may
differ materially from those projected as a result of certain risks and
uncertainties, including but not limited to global economic and market cycles
and conditions; the demand for commercial, specialty and light vehicles for
which the company supplies products; risks inherent in operating abroad
(including foreign currency exchange rates and potential disruption of
production and supply due to terrorist attacks or acts of aggression);
availability and sharply rising cost of raw materials, including steel and oil;
OEM program delays; demand for and market acceptance of new and existing
products; successful development of new products; reliance on major OEM customers;
labor relations of the company, its suppliers and customers, including
potential disruptions in supply of parts to our facilities or demand for our
products due to work stoppages; the financial condition of the company’s
suppliers and customers, including potential bankruptcies; possible adverse
effects of any future suspension of normal trade credit terms by our suppliers;
potential difficulties competing with companies that have avoided their
existing contracts in bankruptcy and reorganization proceedings; successful
integration of acquired or merged businesses; the ability to achieve the
expected annual savings and synergies from past and future business
combinations and the ability to achieve the expected benefits of restructuring
actions; success and timing of potential divestitures; potential impairment of
long-lived assets, including goodwill; potential adjustment of the value of
deferred tax assets; competitive product and pricing pressures; the amount of
the company’s debt; the ability of the company to continue to comply with
covenants in its financing agreements; the ability of the company to access
capital markets; credit ratings of the company’s debt; the outcome of
existing and any future legal proceedings, including any litigation with respect
to environmental or asbestos-related matters; the outcome of actual and
potential product liability and warranty and recall claims; rising costs of
pension and other post-retirement benefits and possible changes in pension and
other accounting rules; as well as other risks and uncertainties, including but
not limited to those detailed from time to time in filings of the company with
the SEC. These forward-looking statements are made only as of the date hereof,
and the company undertakes no obligation to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise, except as otherwise required by law.
CONTACTS: Media Inquiries
Lin Cummins
(248) 435-7112
linda.cummins@arvinmeritor.com
Light Vehicle Systems
Kim Adler
(248) 435-1981
kimberly.adler@arvinmeritor.com
Investor Relations
Terry Huch
(248) 435-9426
terry.huch@arvinmeritor.com
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