Federal-Mogul to acquire Fel-Pro
By Staff -- Industrial Distribution, 2/1/1998
Southfield, Mich.--Fel-Pro, Inc., privately owned since its founding in 1918 as a supplier of gaskets for the Model T, announced on Jan. 12 that it is being purchased by Federal-Mogul for $720 million. The transaction includes $225 million in common stock and $495 million in cash. The sale is subject to regulatory approval and is expected to close the end of next month."Fel-Pro is the premier gasket manufacturer for the North American aftermarket and [original equipment] heavy duty market. This is one of the best known, most respected brand names in the industry and we expect to build on that strength," Dick Snell, chairman and chief executive officer of Federal-Mogul, said in a release. "We share similar values and cultures. Fel-Pro was recently recognized as one of the top 100 best companies to work for."
This is the second recent acquisition Federal-Mogul has announced since the company stated its intent to focus growth efforts on its core engine and sealing systems businesses. In October, 1997, Federal-Mogul announced its intent to acquire T&N, plc, a $3 billion supplier of engine and transmission products. Upon completion of the Fel-Pro and T&N acquisitions, Federal-Mogul will have grown from a $2 billion to a more than $5 billion company with a global sealing business of $1 billion.
"Federal-Mogul is the ideal acquirer of Fel-Pro. They have the leadership, resources, strategy and value systems in place to enable Fel-Pro to achieve its objectives of pursuing international growth opportunities, providing complete sealing capabilities and creating new aftermarket product lines," said Kenneth Lehman and David Weinberg, co-chairmen of Fel-Pro.
"Federal-Mogul shares both our passion and vision to be customer focused, and supports the value of a strong and productive team-oriented employee culture. Together, the strategic fit of our products makes a compelling market offering for both our aftermarket and OE customers," added Lehman, who will be joining Federal-Mogul's Board of Directors.
However, many industry observers question whether its link with a larger company will jeopardize the generous benefits Fel-Pro extends to its employees, including $1,000 savings bonds for new children and generous college scholarships.
In 1997, Fel-Pro had sales of approximately $500 million. The company has more than 2,700 employees in 16 locations organized into four business units: Gaskets, FP Diesel, FP Chemical Products, and FP Performance. Gasket sales for 1997 were approximately $350 million and include cylinder head and molded rubber gaskets, and marine and performance gaskets.
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