SOUTHFIELD, Mich., Jan. 25 /PRNewswire/ -- Federal-Mogul Corporation
(NYSE: FMO), announced today that Dick Snell, chairman and chief executive
officer, has met with Ed Wallis, chairman of LucasVarity, and Victor Rice,
chief executive of LucasVarity. Snell informed them that, based on public
information, Federal-Mogul was considering a proposal to acquire LucasVarity
(NYSE: LVA) at a price of 280 pence per LucasVarity share. Snell expressed
Federal-Mogul's firm belief that the merits of combining the two companies'
operations are compelling, and that both LucasVarity and Federal-Mogul
shareholders would benefit materially from such a combination.
Federal-Mogul envisions that the consideration for any such offer, if
made, would consist of 50% cash and 50% Federal-Mogul shares. This offer
would represent a premium of 40% to LucasVarity's closing share price on
December 30, 1998, the last business day prior to press speculation concerning
possible transactions involving LucasVarity. Federal-Mogul's proposal was
conditional upon, among other matters:
(i) Federal-Mogul being given access to, and satisfied with the results
of, confidential due diligence;
(ii) the recommendation of any such proposal to LucasVarity's
shareholders by the Board of LucasVarity;
(iii) the receipt by Federal-Mogul of satisfactory undertakings to accept
any such offer from the Board of Directors of LucasVarity; and
(iv) the approval of any such proposal by the Board of Directors of
Federal-Mogul.
LucasVarity informed Federal-Mogul in writing on Monday, January 25, 1999
that they are not willing to enter into discussions with Federal-Mogul.
Snell's response to this rejection is set out as an attachment to this
announcement.
Federal-Mogul considers that LucasVarity shareholders should be entitled
to be made aware of this proposal and regrets the current stance taken by the
LucasVarity Board. Federal-Mogul strongly believes that it would be in the
best interest of LucasVarity shareholders for the Board of LucasVarity to
allow Federal-Mogul to conduct due diligence and confirms its eagerness to
undertake such an investigation with immediate effect.
Headquartered in Southfield, Michigan, Federal-Mogul is a $7 billion
automotive parts manufacturer providing innovative solutions and systems to
global customers in the automotive, light truck, heavy-duty, railroad, farm
and industrial markets. The company was founded in 1899. Visit the company's
web site at http://www.federal-mogul.com for more information. Federal-
Mogul's press releases are available by fax through Company News On-Call, call
800-758-5804, ext. 306225.
January 25, 1999
Mr. Edmund A. Wallis
Chairman
Mr. Victor A. Rice
Chief Executive
LucasVarity plc
World Headquarters
46 Park Street
London
W14 4DJ
Dear Ed and Victor,
I'm genuinely disappointed and surprised at your decision not to allow us
to proceed with due diligence on LucasVarity.
Given your recent public confirmation that you are in preliminary
discussions with a number of companies in connection with a wide range of
strategic alternatives, we had hoped that Federal-Mogul would also be allowed
to participate in discussions with LucasVarity. Subject to the conditions
outlined in our proposal to you, we would be prepared to consider making an
offer of 280 pence a share for each outstanding LucasVarity share, a 40%
premium to the share price prior to recent press speculation. This is a full
price which would offer compelling value to your shareholders and in our
judgement is worthy of their consideration.
We are dismayed at your refusal to grant us confirmatory due diligence,
particularly since, as you know, our principal concern in any such
investigation would be to test the reasonableness of the assumptions
underlying items such as the pension fund surplus, rather than any detailed
assessment of commercially sensitive areas within your company.
Federal-Mogul remains very interested in pursuing a strategic combination
with LucasVarity and believes this combination would create a formidable,
world-class company which would be better able to service its customers,
benefit its employees, and most importantly, create shareholder value.
We confirm our enthusiasm to work with you expeditiously to formulate a
firm proposal, which we believe your shareholders are entitled to consider.
We strongly urge you to reconsider your position and look forward to your
early response.
Sincerely,
Dick Snell
Chairman and Chief Executive Officer
SOURCE Federal-Mogul Corporation
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Related links:
http://www.federal-mogul.com
Company News On-Call:
http://www.prnewswire.com/comp/306225.html or fax,
800-758-5804, ext. 306225
CONTACT:
Kimberly A. Welch, vice president, Corporate
Communications, 248-354-1916, or Bonnie Price, vice president,
Investor Relations, 248-354-8847, both of Federal-Mogul; Dan
Dickinson, managing director, 44-171-628-1000, or Philip Yates,
managing director, 44-171-628-1000, both of Merrill Lynch
International; or Gillian Pattison of Tavistock Communications,
44-171-600-2288
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