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 - September 25, 1997
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(Date of Earliest Event Reported)
Carpenter Technology Corporation
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(Exact Name of Registrant as specified in its charter)
Delaware 1-5828 23-0458500
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(State of Incorporation) (Commission (IRS Employer
File No.) I.D. No.)
101 West Bern Street, Reading Pennsylvania, 19601
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(Address of principal executive offices)
Registrant's telephone number, including area code: (610)208-2000
The Exhibit Index is located on Page 4 of 9
Page 1 of 9
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Item 5. Other Events.
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The Registrant announced on September 26, 1997, that on
September 25, 1997, the Registrant executed an Agreement and Plan
of Merger with Talley Industries, Inc. (Talley") to acquire all
of the stock of Talley. The aggregate value of the transaction
will be approximately $312 million, representing $185 million to
acquire Talley's 15.4 million outstanding common and preferred
shares and the assumption of debt. The Registrant will initiate
an all-cash tender offer for all outstanding shares of common and
preferred stock of Talley. The offer price will be $12.00 per
common share, $11.70 per share of Series A convertible preferred
stock and $16.00 per share of Series B convertible preferred
stock. The offer will expire at midnight (Eastern Standard Time)
on October 30, unless it is extended. The offer is conditioned
on shares representing a majority of the voting power of Talley
stock being tendered and other customary conditions, including
approval under the Hart-Scott-Rodino Anti-Trust Improvements Act
of 1976. Following completion of the tender offer the registrant
intends to acquire the balance of Talley stock in a merger.
Talley operates a stainless steel products group, which
includes Talley Metals Technology, Inc., a modern mini-mill that
produces more than 50 grades of stainless steels or specialty
alloys, and Amcan Specialty Steels, Inc., a master distributor
for these and other stainless products. Both units are based in
Hartsville, South Carolina. Amcan has distribution locations in
South Carolina, New Jersey, Pennsylvania, Illinois and Texas.
Talley also has an industrial products group and a
government products and services group. The Registrant expects
to divest the companies in these groups after the acquisition.
Item 7. Financial Statement and Exhibits.
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(a) and (b) None.
(c) Exhibits:
Item 99. Press Release dated September 26, 1997.
Page 2 of 9.
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Date: September 30, 1997 CARPENTER TECHNOLOGY CORPORATION
(Registrant)
By: s/John R. Welty
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John R. Welty
Vice President
General Counsel and Secretary
Page 3 of 9
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EXHIBIT INDEX
Sequential
Exhibit Description Page Number
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Item 99 Press release dated September 26, 1997 5
Page 4 of 9.
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Contact: Katharine Marshall
IMMEDIATE RELEASE (610) 208-3034
Daniel Sieger
(212) 593-5883
CARPENTER ANNOUNCES MAJOR ACQUISITION
TO EXPAND MANUFACTURING CAPACITY
Reading, PA (September 26, 1997) -- Carpenter Technology
Corporation (NYSE:CRS) announced today that it has entered into a
definitive agreement to acquire Talley Industries, Inc.
(NYSE:TAL) as a way to expand its metals manufacturing capacity.
On October 2, Carpenter will initiate an all-cash tender
offer for all outstanding shares of common and preferred stock of
Talley. The offer prices will be $12.00 per share of common
stock, $11.70 per share of Series A convertible preferred stock
and $16.00 per share of Series B convertible preferred stock.
The offer will expire at midnight (Eastern Standard Time) on
October 30, unless it is extended. The offer is conditioned upon
shares representing a majority of the voting power of Talley
stock being tendered and upon other customary conditions,
including expiration of the Hart-Scott-Rodino waiting period.
Credit Suisse First Boston will be dealer manager of the tender
offer.
MORE
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Carpenter/page 2
Following completion of the tender offer, Carpenter, a
specialty materials manufacturer, intends to acquire the balance
of Talley stock in a merger. The aggregate value of the
transaction will be approximately $312 million, representing $185
million to acquire Talley's 15.4 million outstanding common and
preferred shares and the assumption of debt. In 1996, Talley,
based in Phoenix, Ariz., had revenues of $502.7 million and net
earnings of $18.7 million.
To finance the acquisition, Carpenter will expand its
revolving credit agreement and will issue short-term debt to
acquire all of Talley's equity. Shortly thereafter, Carpenter
plans to issue $100 million of common stock in a public offering
in the fourth calendar quarter and expects to use the proceeds to
pay down debt.
Talley operates a stainless steel products group, which
includes Talley Metals Technology, Inc., a modern mini-mill that
produces more than 50 grades of stainless steels or specialty
alloys, and Amcan Specialty Steels, Inc., a master distributor
for these and other stainless products. Both units are based in
Hartsville, S.C. Amcan has distribution depots in South
Carolina, New Jersey, Pennsylvania, Illinois and Texas. In
calendar 1996, $136.3 million of Talley's revenues, and $11
million of operating income, came from the Stainless Steel
Products group.
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Carpenter/page 3
Talley currently supplies Carpenter with stainless bar
products to augment the manufacturing capacity of the Carpenter
Specialty Alloys Operations main plant in Reading, Pa. "Our
five-year outlook required us to seek out more manufacturing
capacity, and this acquisition will give us a modern facility
known for its high-quality products and competitive costs," said
Robert W. Cardy, chairman, president and CEO of Carpenter.
Carpenter intends to further invest in Talley Metals to
increase capacity and reduce costs.
Talley also has a government products and services group,
accounting for $148 million of revenue in 1996, and an industrial
products group, which had revenues of $74 million in 1996.
Carpenter expects to divest the companies in these groups and has
retained Credit Suisse First Boston to assist with the
divestitures.
The government products group makes components of systems
that generally enhance safety or improve performance. Many of
its existing products and new product development efforts involve
mobile, tactical and "smart" military weapons and systems. The
group also provides a broad range of architectural and engineering
design consulting services for the U.S. Navy, various commercial
clients and shipyards. Talley recently entered into a joint venture
agreement with the Delphi Automotive Systems unit of General Motors
to make air bag inflators.
MORE
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Carpenter/page 4
Talley's industrial products include high-voltage ceramic
insulators, specialty products to control insects, odors and
pests, welding equipment and systems, power supply systems,
humidistats that regulate humidity levels and brass buttons.
The companies expected to be sold include: Talley Defense
Systems, Inc., of Mesa, Ariz.; Universal Propulsion Company, Inc.
of Phoenix, Ariz.; Electrodynamics, Inc. of Rolling Meadows,
Ill.; John J. McMullen Associates, Inc., of Arlington, Va.; Rowe
Industries, Inc. of Toledo, Ohio; Dimetrics, Inc. of Davidson,
N.C.; Porcelain Products Co. of Carey, Ohio; and Waterbury
Companies, Inc., Waterbury, Conn.
Carpenter expects the acquisition of Talley to be slightly
dilutive to earnings per share in fiscal 1998 (ending June 30,
1998) and accretive to earnings per share thereafter.
Carpenter began acquiring companies in 1993 as a way to
achieve higher growth. Since then, the company has completed
nine acquisitions, giving the company access to new materials
technologies, a greater international presence, an expanded
product line and additional metals manufacturing capacity. Two
other acquisitions are pending.
As a result, Carpenter's revenues, which were $570 million
five years ago, are expected to exceed the $1 billion mark this
fiscal year. Primary earnings per share grew at a compounded
annual growth rate of about 35 percent over the past five years.
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Carpenter/page 5
Talley Metals and Amcan will continue to be managed by Don Bailey,
president, who will report to Dennis M. Draeger, senior vice president
- - Specialty Alloys Operations. The remaining businesses of Talley will
continue to be managed by Jack C. Crim, president and chief operating
officer. Crim will report to Cardy.
Cardy also indicated that, for the quarter ending
September 30, 1997, management expects that Carpenter's primary
earnings will be in line with analysts' estimates of $.75-.80 per
share.
Carpenter is a leading manufacturer of stainless steel,
specialty alloys including titanium alloys, and various
engineered products. Sales in fiscal 1997 (ended June 30, 1997)
were $939 million.
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