Carpenter Completes Latrobe Acquisition; Full Integration to Begin Immediately
February 29 2012 - 1:45PM
Business Wire
Carpenter Technology Corporation (NYSE: CRS) today announced
that they have completed the acquisition of Latrobe Specialty
Metals, Inc. following approval by the U.S. Federal Trade
Commission (FTC).
In June 2011, the companies announced a definitive merger
agreement whereby Carpenter would acquire Latrobe in a transaction
valued at approximately $558 million based on Carpenter’s share
price at the time of announcement. Former owners of Latrobe,
including Hicks Equity Partners and The Watermill Group, received
8.1 million shares of Carpenter stock as a part of the transaction.
Pursuant to the terms of the merger agreement, Carpenter also paid
approximately $168 million in cash at closing to pay off Latrobe
debt and reimburse certain transaction costs.
As part of the FTC approval, Carpenter entered into a consent
decree to transfer assets and technical knowledge to Eramet S.A.
and its subsidiaries, Aubert & Duval and Brown Europe, which
will allow them to become a second manufacturer of two specific
alloys in order to provide customers with a supply alternative in
the marketplace. The alloys (MP35N® and MP159®) have minimal sales
impact, and will cause no material change to the economics of the
transaction. Carpenter has agreed to transfer or acquire assets
worth approximately $5 million as part of the agreement with
Eramet, and will record a charge for this liability in the current
quarter.
Concurrent with the closing of the transaction, Carpenter’s
Board of Directors has elected Thomas O. Hicks, Chairman and Chief
Executive Officer of Hicks Equity Partners and Steven E. Karol,
Managing Partner and Founder of The Watermill Group to the Board,
consistent with the terms of the merger agreement.
“We’re excited to begin the next chapter in the history of these
two great companies,” said William A. Wulfsohn, Carpenter’s
President & CEO. “We will immediately begin to integrate the
businesses and focus on leveraging the combined capabilities to
increase production capacity and optimize total system costs. A key
benefit of this transaction – in combination with our new premium
products focus facility in Alabama – will be to substantially
increase production to meet strong customer demand for premium
products. We still expect the transaction will be accretive to
shareholders in the first full year and strongly accretive
thereafter.”
“I am excited to join the Carpenter Board and support the
Company in realizing its strategy to be the leading provider of
specialty materials globally,” said Steven E. Karol. “The Latrobe
competencies paired with Carpenter’s current and future
capabilities are an extraordinary combination.”
“I am pleased by the focus and collaboration our teams
demonstrated in completing this transaction,” said Thomas O. Hicks.
“The combined companies have strong growth prospects in their
business markets and I look forward to supporting the businesses as
a major shareholder and member of Carpenter's Board.”
Andy Ziolkowski has been selected to lead operations at Latrobe
as Senior Vice President – Latrobe Operations. Ziolkowski has been
with Carpenter Technology for more than two decades and recently
held the position of Vice President – Bar and Coil Business, and
Senior Vice President – Strategic Integration to lead the
integration planning efforts. He holds an MBA from St. Joseph’s
University, Philadelphia and an undergraduate degree from Indiana
University of Pennsylvania.
Chris DiSantis, Latrobe’s President & CEO since January
2011, will continue in a consulting role for Carpenter.
*MP35N and MP159 are Registered Trademarks of SPS Technologies,
LLC
Forward-Looking Statements
Except for historical information, all other information in this
news release consists of forward-looking statements within the
meaning of the Private Securities Litigation Act of 1995. These
forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ from those projected,
anticipated or implied. The most significant of these uncertainties
are described in Carpenter's filings with the Securities and
Exchange Commission including its annual report on Form 10-K for
the year ended June 30, 2011 and the quarterly reports on Form 10-Q
for the quarters ended September 30, 2011, December 31, 2011 and
the exhibits attached to those filings. They include but are not
limited to: (1) the parties’ expectations with respect to the
synergies, costs and other anticipated financial impacts of the
transaction could differ from actual synergies realized, costs
incurred and financial impacts experienced as a result of the
transaction; (2) the impact of the consent decree and the transfer
of assets and technical knowledge to Eramet S.A. and its
subsidiaries, (3) the ability to merge the Carpenter and Latrobe
businesses and to leverage the combined capabilities to increase
production capability and optimize total system costs; (4) the
cyclical nature of the specialty materials business and certain
end-use markets, including aerospace, industrial, automotive,
consumer, medical, and energy, or other influences on Carpenter's
business such as new competitors, the consolidation of competitors,
customers, and suppliers or the transfer of manufacturing capacity
from the United States to foreign countries;(5) the ability of
Carpenter to achieve cost savings, productivity improvements or
process changes; (6) the ability to recoup increases in the cost of
energy, raw materials, freight or other factors; (7) domestic and
foreign excess manufacturing capacity for certain metals; (8)
fluctuations in currency exchange rates; (9) the degree of success
of government trade actions; (10) the valuation of the assets and
liabilities in Carpenter's pension trusts and the accounting for
pension plans; (11) possible labor disputes or work stoppages; (12)
the potential that our customers may substitute alternate materials
or adopt different manufacturing practices that replace or limit
the suitability of our products; (13) the ability to successfully
acquire and integrate acquisitions;(14) the availability of credit
facilities to Carpenter, its customers or other members of the
supply chain; (15) the ability to obtain energy or raw materials,
especially from suppliers located in countries that may be subject
to unstable political or economic conditions; (16) our
manufacturing processes are dependent upon highly specialized
equipment located primarily in one facility in Reading,
Pennsylvania for which there may be limited alternatives if there
are significant equipment failures or catastrophic event; and (17)
our future success depends on the continued service and
availability of key personnel, including members of our executive
management team, management, metallurgists and other skilled
personnel and the loss of these key personnel could affect our
ability to perform until suitable replacements are found. Any of
these factors could have an adverse and/or fluctuating effect on
Carpenter's results of operations. The forward-looking statements
in this document are intended to be subject to the safe harbor
protection provided by Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Carpenter undertakes no obligation to update or revise
any forward-looking statements.
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