Carpenter completes Latrobe Acquisition; Full integration to begin immediately
March 7, 2012
Carpenter Technology Corporation, Wyomissing, PA, USA, today announced the completion of 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 optimise 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
Edited by: Paul Whittaker, Editor ipmd.net, [email protected]
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