 |
 |
||||||
[February 2007]
American Standard to Separate its Three Businesses: Bath to be Sold
The directors of American Standard Companies Inc (Piscataway, NJ, USA) have completed a strategic review of the company and unanimously approved a plan to separate its three businesses this year."The board has concluded that separating American Standard into three focused, better understood companies will create greater shareowner value than the current structure," said Fred Poses, Chairman and CEO. "The businesses have the size, global reach, industry leadership and organizational talent to succeed as separate companies."
Upon completion of the plan, American Standard will focus on its global market-leading air conditioning systems and services business with 2006 sales of US$6.8 billion and will change the company's name to Trane, the company's flagship air conditioning brand. The company plans to spin off its global vehicle control systems business with 2006 sales of US$2 billion as an independent, publicly traded company, expected to be known as WABCO. It plans to implement the spinoff through a tax-free stock dividend of all WABCO common stock to American Standard shareowners, who would receive one share of WABCO common stock for every three shares of American Standard common stock currently owned.
In addition, American Standard plans to sell its bath and kitchen business with 2006 sales of US$2.4 billion. The company expects to complete both the spinoff of WABCO and the sale of Bath and Kitchen by early autumn this year.
"We've come a long way since the company went public in 1995," said Mr Poses. "Over the past 12 years, we've generated average annual total shareowner returns of about 18 percent. Over the past seven years, we reduced our debt by more than $1 billion, achieved investment grade ratings, and established our quarterly dividend and subsequently increased it. At the same time, we invested in our businesses to strengthen their overall capabilities.
"Looking to the future, our board concluded that the separation plan we are announcing today is the best way to enhance shareowner value. Operating separately, the businesses will benefit from greater strategic focus, increased market recognition, improved capital flexibility, and an increased ability to attract, retain and motivate employees."
The sales process for the company's bath and kitchen business is expected to begin this month. Proceeds from the sale are expected to be used to reduce the liabilities of the remaining company (Trane) and to repurchase Trane's common stock.
Until the sale and spinoff are completed, American Standard expects to continue to pay its quarterly dividend of 18 cents per share. Trane and WABCO are expected to have capital structures and financial policies consistent with investment grade ratings. The company expects that Trane and WABCO will initially pay dividends that in total approximate the dividend currently paid by American Standard. However, once WABCO is spun off, its board will determine its dividend policy.
Trane's headquarters will remain in Piscataway and the company will continue to trade on the New York Stock Exchange using a new stock symbol to be announced later. WABCO will be a U.S. company, with executive and administrative offices in Brussels, Belgium, and Piscataway. It is also expected to be listed on the NYSE.
The company will retain the right to use the American Standard brand name for its heating, ventilation and air conditioning (HVAC) products.
Bath and Kitchen's products are sold under a powerful portfolio of brands, consisting of two flagship brands – American Standard in the Americas and Asia-Pacific and Ideal Standard in Europe – as well as strong local and specialty brands, such as Armitage Shanks and the Jado luxury fittings brand.
www.americanstandard.com
ENDS