Kenner Buys L&G Aluminum

Kenner & Co. has acquired the Aluminum Products unit of industrial manufacturer Leggett & Platt (NYSE: LEG). The deal includes $300 million in cash, a $25 million subordinated note and up to $25 million worth of preferred stock.




Diversified manufacturer Leggett & Platt announced that the divestiture of its Aluminum Products segment closed today, July 16. Leggett received $300 million in cash, a $25 million subordinated note, and shares of preferred stock (with value not to exceed $25 million, dependent upon the segment's future performance). This transaction did not result in a significant book gain or loss. As previously announced, Leggett intends to use a substantial portion of the cash proceeds to repurchase its stock.


The divestiture is part of a broad strategic plan, first announced last November, that includes, among other things, elimination of approximately one-fifth of Leggett's business portfolio via the sale or liquidation of seven business units. Of the seven units (which collectively generate about $900 million in annual revenue), the company's Aluminum Products segment is the largest, and is North America's largest independent manufacturer of non-automotive aluminum die castings. Existing senior management of the Aluminum Products segment will continue to lead the operations for the new owner, and will become significant equity participants in the acquired company.


President and CEO David S. Haffner remarked, “We are pleased to report the completion of this transaction, which generates approximately $300 million of after-tax cash proceeds immediately, and also provides potential future value in the form of a subordinated note and preferred stock. From an overall perspective, we have now received 75% of the $400 million of after-tax cash proceeds we originally anticipated from the divestiture of our seven targeted business units. While cognizant of the ongoing difficult market environment for M&A transactions, we are diligently proceeding with, and optimistic about, the disposition of our six remaining business units during 2008. All of this activity, and the corresponding use of a substantial portion of the cash proceeds to repurchase our stock, is directly correlated to our strategic plan and its sharp focus upon improving total shareholder return.”


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