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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 9, 1998
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Dana Corporation
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(Exact name of registrant as specified in its charter)
Virginia 1-1063 34-4361040
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(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
4500 Dorr Street, Toledo, Ohio 43615
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (419) 535-4500
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(Former Name)
Item 5. Other Events.
On July 9, 1998 Dana Corporation, a Virginia corporation (the
"Company"), issued a press release (the "Press Release") announcing the
completion of the merger (the "Merger") of Echo Acquisition Corp., a Connecticut
corporation and a wholly owned subsidiary of the Company, with and into Echlin
Inc., a Connecticut corporation ("Echlin"), with Echlin surviving the Merger as
a wholly owned subsidiary of Dana. A copy of the Press Release is attached
hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits. The following exhibits are filed with this
Report:
Exhibit No. Description
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99.1 Press Release, dated July 9, 1998, issued by
the Company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed by the
undersigned, thereunto duly authorized.
DANA CORPORATION
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(Registrant)
By /s/ Martin J. Strobel
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Martin J. Strobel
Vice President and General Counsel
Dated: July 9, 1998
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DANA CORPORATION
Current Report on Form 8-K
Exhibit Index
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Exhibit No. Description
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99.1 Press Release, dated July 9, 1998, issued by
the Company.
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ECHLIN CLOSING FINAL (7.9.98 3P)
IMMEDIATE CONTACT: GARY CORRIGAN
(419) 535-4813
DANA COMPLETES MERGER WITH ECHLIN,
CREATES LEADING GLOBAL AUTOMOTIVE SUPPLIER
TOLEDO, OHIO, JULY 9, 1998 - DANA CORPORATION (NYSE: DCN) TODAY ANNOUNCED THE
COMPLETION OF THE MERGER OF A SUBSIDIARY WITH ECHLIN INC., CREATING ONE OF THE
WORLD'S LARGEST INDEPENDENT COMPANIES SUPPLYING COMPONENTS TO BOTH AUTOMOTIVE
ORIGINAL EQUIPMENT MANUFACTURERS AND THE AFTERMARKET.
VALUED AT APPROXIMATELY $3.9 BILLION, THE TRANSACTION IS THE LARGEST IN THE
HISTORY OF THE AUTOMOTIVE COMPONENTS INDUSTRY, ACCORDING TO DATA SUPPLIED BY
SECURITIES DATA CO. AND AUTOMOTIVE NEWS.
AS PART OF THE MERGER, ECHLIN SHAREHOLDERS WILL RECEIVE 0.9293 OF A SHARE OF
DANA COMMON STOCK FOR EACH SHARE OF ECHLIN THEY OWNED ON JULY 9. BASED UPON A
CLOSING PRICE OF $54.75 PER SHARE FOR DANA ON JULY 8, THIS REPRESENTS A PRICE OF
$50.88 PER SHARE OF ECHLIN.
THE TAX-FREE, STOCK-FOR-STOCK TRANSACTION WILL BE ACCOUNTED FOR AS A POOLING OF
INTERESTS AND IS EXPECTED TO BE ACCRETIVE TO DANA'S EARNINGS PER SHARE IN 1999
AND BEYOND. DANA WILL ISSUE APPROXIMATELY $3.3 BILLION OF DANA COMMON STOCK TO
ECHLIN SHAREHOLDERS AND WILL ASSUME ABOUT $630 MILLION IN ECHLIN DEBT.
SOUTHWOOD J. MORCOTT, DANA CHAIRMAN AND CHIEF EXECUTIVE OFFICER SAID, "THIS
STRATEGIC COMBINATION CREATES A STRONGER AND MORE BALANCED DANA WITH THE
RESOURCES TO BE THE WORLDWIDE LEADER UNDER THE VEHICLE, UNDER THE HOOD, AND IN
THE AFTERMARKET."
THE COMBINATION WITH ECHLIN - WHICH REPORTED SALES OF $3.6 BILLION IN 1997 -
GREATLY EXPANDS DANA'S PRESENCE IN THE GLOBAL AUTOMOTIVE AFTERMARKET AND
SELECTED OE SEGMENTS. THE COMBINED COMPANY WILL BE ABLE TO OFFER MORE
COMPREHENSIVE PRODUCT LINES TO BOTH OE AND AFTERMARKET CUSTOMERS WORLDWIDE THAN
EITHER COMPANY COULD ACHIEVE INDIVIDUALLY.
"DANA PLANS TO LEVERAGE ITS MARKET STRENGTHS BY CAPITALIZING ON ECHLIN'S PREMIER
POSITION IN THE AUTOMOTIVE AFTERMARKET TO SELL DANA'S PRODUCTS," MORCOTT SAID.
"AT THE SAME TIME, DANA'S RESOURCES AND OUTSTANDING CUSTOMER RELATIONSHIPS WILL
ACCELERATE ECHLIN'S EFFORTS TO GROW WITH GLOBAL ORIGINAL-EQUIPMENT CUSTOMERS
WHERE DANA ALREADY HAS A LEADERSHIP POSITION."
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ENHANCED PRODUCT LINE OFFERED
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WITH THE MERGER COMPLETE, DANA NOW MANUFACTURES PRODUCTS USED ON MORE THAN 95
PERCENT OF THE WORLD'S 600 MILLION MOTOR VEHICLES. THE MERGER ADDS BRAKES AND
FLUID-HANDLING SYSTEMS TO DANA'S EXISTING CORE PRODUCT LINEUP OF AXLES,
DRIVESHAFTS, STRUCTURAL PRODUCTS, SEALING PRODUCTS, ENGINE PRODUCTS, FILTRATION
PRODUCTS, INDUSTRIAL PRODUCTS, AND LEASING SERVICES. THE MERGER ALSO
SIGNIFICANTLY ENHANCES DANA'S ENGINE PRODUCTS OFFERING.
AS A RESULT OF THE MERGER, DANA HAS CREATED ITS SEVENTH STRATEGIC BUSINESS UNIT,
THE AUTOMOTIVE AFTERMARKET GROUP, WHICH WILL FOCUS ON SERVICE PARTS AND
DISTRIBUTION.
MORCOTT ALSO POINTED OUT ANOTHER BENEFIT, THE ACQUISITION OF ECHLIN'S NEARLY TWO
DOZEN QUINTON HAZELL MANUFACTURING AND DISTRIBUTION OPERATIONS IN EUROPE.
"QUINTON HAZELL IS ONE OF EUROPE'S BEST-KNOWN NAMES FOR SUPPLYING PRODUCTS TO
WAREHOUSE DISTRIBUTORS, JOBBERS, RETAILERS, AND PARTS PRODUCERS," HE SAID. "IN
QUINTON HAZELL, WE GAIN AN IMPORTANT MANUFACTURING-ORIENTED DISTRIBUTION
FOOTHOLD IN EUROPE, WHICH WILL HELP DANA SUPPLY ITS CORE PRODUCTS TO A VARIETY
OF CUSTOMERS IN THE UNITED KINGDOM AND ELSEWHERE IN EUROPE."
SYNERGY PLANS OUTLINED
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INCLUDING REPOSITIONING PLANS PREVIOUSLY INITIATED BY ECHLIN, THE COMBINATION OF
DANA AND ECHLIN IS EXPECTED TO GENERATE TOTAL PRE-TAX SAVINGS OF $30 MILLION
THIS YEAR, $170 MILLION IN 1999, AND $340 MILLION IN 2000.
DANA EXPECTS SYNERGIES FROM THE MERGER TO ADD APPROXIMATELY $200 MILLION
ANNUALLY TO OPERATING INCOME ONCE INTEGRATION OF THE TWO COMPANIES IS ACHIEVED
IN 2000. 1999 PRE-TAX SYNERGIES FROM THE TRANSACTION ARE EXPECTED TO BE $75
MILLION. SAVINGS ARE EXPECTED TO RESULT FROM THE ELIMINATION OF DUPLICATE
FUNCTIONS, CONSOLIDATION OF DISTRIBUTION AND MARKETING INFRASTRUCTURE, IMPROVED
PRODUCTIVITY, AND IMPROVEMENTS IN GLOBAL SOURCING OF MATERIALS AND COMPONENTS.
ECHLIN'S PHASE I COST-REDUCTION PLAN, ANNOUNCED LAST YEAR, IS EXPECTED TO TOTAL
$40 MILLION IN ANNUALIZED, PRE-TAX SAVINGS IN 1999 AND BEYOND. THE SAVINGS
RESULT FROM A REORGANIZATION INTO CORE BUSINESS UNITS, $500 MILLION IN
DIVESTITURES, IMPLEMENTATION OF EVA DISCIPLINES, FACILITY RATIONALIZATION, AND
PEOPLE REDUCTIONS. PRIOR TO THE MERGER, ECHLIN HAD SAID IT EXPECTED TO REALIZE
ABOUT $30 MILLION IN SYNERGIES FROM PHASE I THIS YEAR.
IN MARCH, ECHLIN ANNOUNCED PHASE II OF ITS REORGANIZATION, WHICH CONSISTS OF A
SERIES OF OPERATIONAL STRATEGIES AND IMPROVEMENTS. GLOBAL SOURCING INITIATIVES
WILL REDUCE THE SUPPLY BASE BY 40 PERCENT, REALIZE A 5-PERCENT COST REDUCTION ON
$2 BILLION WORTH OF ANNUAL PURCHASES, AND COORDINATE AND CENTRALIZE PURCHASING.
THIS PROGRAM IS EXPECTED TO ACHIEVE PRE-TAX SAVINGS OF $55 MILLION IN 1999 AND
$100 MILLION IN 2000.
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THESE SYNERGIES DO NOT INCLUDE SIGNIFICANT POTENTIAL REVENUE ENHANCEMENTS
STEMMING FROM THE TWO COMPANIES' RESPECTIVE STRENGTHS. FOR EXAMPLE, DANA INTENDS
TO CAPITALIZE ON ECHLIN'S PREMIER POSITION IN THE AFTERMARKET BY ACCELERATING
EFFORTS TO GROW ITS CUSTOMER BASE IN THE LUCRATIVE AND RAPIDLY EXPANDING
INTERNATIONAL MARKETS.
"THIS TRANSACTION ALSO STRENGTHENS OUR BALANCE SHEET," MORCOTT SAID. "BY THE END
OF 1999, DANA IS EXPECTED TO HAVE DEBT-TO-TOTAL CAPITAL OF ABOUT 40 PERCENT.
THIS POSITIONS US WELL TO CAPITALIZE ON OPPORTUNITIES FOR FUTURE GROWTH."
ECHLIN WAS FOUNDED IN SAN FRANCISCO IN 1924 BY JACK AND EARL ECHLIN. THE COMPANY
EXPANDED ITS PRODUCT OFFERING FROM IGNITION AND FUEL SYSTEM PARTS TO BRAKE,
POWER TRANSMISSION, AND STEERING AND SUSPENSION SYSTEMS COMPONENTS. IT ALSO
EXTENDED ITS GLOBAL REACH. ECHLIN REPORTED ANNUAL SALES OF $3.6 BILLION IN 1997,
MAKING IT ONE OF THE LARGEST INDEPENDENT REPLACEMENT PARTS MANUFACTURERS IN THE
WORLD.
FOUNDED IN 1904 AND BASED IN TOLEDO, OHIO, DANA NOW OPERATES 270 MAJOR
FACILITIES IN 33 COUNTRIES SPREAD OVER SIX CONTINENTS AND EMPLOYS MORE THAN
79,000 PEOPLE. THE PRO FORMA SALES OF THE COMBINED COMPANY WERE $11.9 BILLION IN
1997. DANA'S INTERNET ADDRESS IS WWW.DANA.COM.
CERTAIN STATEMENTS CONTAINED HEREIN CONSTITUTE "FORWARD-LOOKING" STATEMENTS
WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH
FORWARD-LOOKING STATEMENTS INVOLVE NUMEROUS ASSUMPTIONS, KNOWN AND UNKNOWN
RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL AND FUTURE
PERFORMANCE OR ACHIEVEMENTS OF DANA OR ECHLIN, INCLUDING WITH RESPECT TO THE
MERGER, TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. SUCH
FACTORS INCLUDE, AMONG OTHER THINGS, THE FOLLOWING: ACHIEVING SALES LEVELS TO
FULFILL REVENUE EXPECTATIONS; THE ABSENCE OF PRESENTLY UNEXPECTED COSTS OR
CHARGES, CERTAIN OF WHICH MAY BE OUTSIDE THE CONTROL OF DANA AND ECHLIN; THE
CYCLICAL NATURE OF THE AUTOMOTIVE INDUSTRY; FAILURE TO ACHIEVE SYNERGIES OR
SAVINGS ANTICIPATED IN THE MERGER; GENERAL ECONOMIC AND BUSINESS CONDITIONS; AND
COMPETITION. ADDITIONAL FACTORS ARE DETAILED IN DANA'S AND ECHLIN'S PUBLIC
FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. DANA DISCLAIMS ANY
RESPONSIBILITY TO UPDATE ANY FORWARD-LOOKING STATEMENT PROVIDED IN THIS PRESS
RELEASE.
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