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):
October 16, 1997
FEDERAL-MOGUL CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number: 1-1511
Michigan 38-0533580
(State or other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
26555 Northwestern Highway, Southfield, Michigan 48034
(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: (810) 354-7700
<PAGE>
INFORMATION TO BE INCLUDED IN REPORT
ITEM 5. Other Events.
On October 16, 1997, Registrant issued a press release
announcing a recommended cash offer for T & N plc. Additional
details are set forth on the attached public announcement (EXHIBIT
A).
SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned, thereto
duly authorized.
FEDERAL-MOGUL CORPORATION
By:________________________
Diane L. Kaye
Vice President, General
Counsel and Secretary
Dated: October 16, 1997
<PAGE>
EXHIBIT INDEX
Exhibit Table
Number
_________________________________________________________________
99 Exhibit A Registrant's Press Release
dated October 16, 1997.
<PAGE>
EXHIBIT A
Contact: Kimberly A. Welch 248/354-1916
FOR IMMEDIATE RELEASE
FEDERAL-MOGUL ANNOUNCES RECOMMENDED CASH OFFER FOR T & N plc
Southfield, Michigan, October 16, 1997...Federal-Mogul
Corporation (NYSE:FMO) and T & N plc announced today they have
agreed to the terms of a recommended cash offer by Federal-Mogul of
260 pence per share for the entire issued share capital of T & N.
The offer values T & N's issued share capital at $2.4 billion (pounds 1.5
billion).
The offer represents premia of 65% and 74%, respectively to T
& N's average share price in the one month and three months prior
to the September 26, 1997 announcement of Federal-Mogul's approach
to T & N.
"This is an excellent transaction for the shareholders and
customers of both companies," said Dick Snell, Federal-Mogul
chairman and chief executive officer. "This represents a
significant step toward meeting our objective of achieving
profitable growth through enhanced systems capabilities and
international expansion."
"The combined group will have the scale, reach and the
manufacturing and research capabilities to better serve our
customers worldwide and to take advantage of the significant
opportunities created by consolidation trends in the sector," added
Snell. "The group will be led by an experienced and customer-
focused management team comprised of managers from both companies.
I am confident that the cultural fit of the two companies will
ensure a smooth and orderly transition period."
Federal-Mogul's acquisition of T & N will:
. create a highly competitive Tier I automotive supplier
worldwide;
. expand its manufactured product portfolio to offer systems
and modules;
. enhance Federal-Mogul's position as a supplier of engine and
transmission products worldwide;
. reinforce Federal-Mogul's ability to provide a high quality
service to both its original equipment and aftermarket
customers;
. extend Federal-Mogul's international reach and accelerate
its worldwide aftermarket growth;
. create an organization which builds on the strength of the
leadership, expertise and working practices of both
companies to further improve efficiencies.
"The combination of Federal-Mogul and T & N has considerable
international and market logic and should benefit the enlarged
group's customers and employees," said Sir Colin Hope, T & N
chairman. "I believe this is a strategically good deal for
Federal-Mogul and, bearing in mind the extent to which the stock
market has undervalued T & N, the cash offer is at a level which
the Board unanimously believes can be recommended to shareholders."
Federal-Mogul will be providing the cash required under the
offer through a bank facility from The Chase Manhattan Bank.
Federal-Mogul's intention is to put in place a permanent capital
structure that reflects its financial goals. Permanent financing
will be an appropriate combination of equity and debt financing.
Significant synergies and operating efficiencies are expected
to be achieved. Federal-Mogul is anticipating that pre-tax
synergies will reach in excess of $100 million in the second year
following the acquisition. This will require one-time
restructuring costs approximately equal to the amount of one year's
anticipated synergies. Federal-Mogul expects the acquisition will
generate positive economic value added and positive cash flow. The
acquisition will be moderately accretive to EPS in 1998 and more
accretive in 1999.
The Offer is subject to various conditions customary in the
United Kingdom, including acceptances of the Offer by T & N
shareholders and the receipt of all applicable regulatory approvals
in the United States and Europe.
Headquartered in Southfield, Michigan, Federal-Mogul is a $2
billion global manufacturer and distributor of a broad range of
non-discretionary parts primarily for automobiles, light trucks,
heavy trucks, and farm and construction vehicles. Federal-Mogul was
founded in 1899.
# # # #
Information in this press release contains forward-looking
statements which are not historical facts and involve risks and
uncertainties. Actual results, events and performance could differ
materially from those contemplated by such statements, including,
without limitation, as a result of risks and uncertainties relating
to the combination of the businesses of Federal-Mogul and T & N,
conditions in the automotive components industry, certain global
and regional economic conditions, other factors discussed in this
press release and factors detailed from time to time in Federal-
Mogul's filings with the Securities and Exchange Commission.
<PAGE>
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO CANADA
FEDERAL-MOGUL CORPORATION ("Federal-Mogul")
RECOMMENDED CASH OFFER FOR T&N plc ("T&N")
THE OFFER
. The boards of Federal-Mogul and T&N announce that they have
agreed the terms of a recommended cash offer, to be made by
Morgan Stanley & Co. Limited on behalf of a wholly-owned
indirect subsidiary of Federal-Mogul, to acquire the entire
issued share capital of T&N.
. The Offer will be 260 pence in cash, for each T&N Ordinary
Share and values T&N's entire issued ordinary share capital,
assuming that all outstanding options have been exercised and
assuming full take-up in respect of the scrip alternative to
the 1997 second interim dividend, declared on 28 August 1997,
at approximately pounds 1.5 Billion.
. The Offer represents a premium of 42.9 per cent. to T&N's
share price at the close of business on 25 September 1997,
the last dealing day before the announcement that T&N had
received an approach from Federal-Mogul. The Offer
represents premia of 65.1 per cent. and 73.6 per cent. to
T&N's average share price in the one month and three months,
respectively, prior to 25 September 1997.
The directors of T&N intend to declare a dividend of 3 pence
(net) per T&N Ordinary Share, to be paid whether or not the
Offer becomes unconditional in all respects.
STRATEGIC RATIONALE
Federal-Mogul believes that the acquisition of T&N will:
. create a highly competitive Tier I automotive supplier
worldwide.
. expand its manufactured product portfolio to offer systems
and modules.
. enhance Federal-Mogul's position as a supplier of engine and
transmission parts.
. reinforce Federal-Mogul's ability to provide a high quality
service to both its original equipment and aftermarket
customers.
. extend Federal-Mogul's international reach and accelerate its
worldwide aftermarket growth.
. create an organization which builds on the strength of
leadership, expertise and working practices of both companies
to further improve efficiencies.
Federal-Mogul expects significant synergies and operating
efficiencies to be achieved as a result of the acquisition.
Based on the information currently available to it, Federal-
Mogul is anticipating annual pre-tax synergies to reach in
excess of US$100 million starting from the second full year
following the acquisition. Achieving these will require a
once-off restructuring charge of an amount approximately
equal to the annual level of synergy benefits achieved in the
second year.
FINANCING
The cash required to satisfy the consideration payable to T&N
Shareholders under the Offer will be provided by a bank facility
from The Chase Manhattan Bank. It is Federal-Mogul's intention to
put in place a permanent capital structure that reflects its
financial goals. To that end, Federal-Mogul intends in due course
to refinance the bridge components of this facility with an
appropriate combination of equity and debt financing. Federal-
Mogul may pursue a portion of this refinancing prior to the
completion of the Offer.
COMMENTS
Commenting on the Offer, Dick Snell, Chairman and Chief Executive
Officer of Federal-Mogul said:
"This is an excellent transaction for the shareholders and
customers of both companies. It makes us a highly competitive
force in the automotive systems market place worldwide and
represents a significant step toward meeting our objective of
achieving profitable growth through enhanced systems capabilities
and international expansion.
The combined group will have the scale, reach and the manufacturing
and research capabilities to better serve our customers worldwide
and to take advantage of the significant opportunities created by
consolidation trends in the sector.
The group will be led by an experienced and customer-focused
management team comprising managers of both companies, and I am
confident that the excellent cultural fit of the two companies will
ensure a smooth and orderly transition period."
Commenting on the Offer, Sir Colin Hope, Chairman of T&N said:
"The combination of Federal-Mogul and T&N has considerable
international and market logic and should benefit the enlarged
group's customers and employees.
I believe this is strategically a good deal for Federal-Mogul and,
bearing in mind the extent to which the Stock Market has
undervalued T&N, the cash offer is at a level which the board of
T&N unanimously believes can be recommended to shareholders."
THIS SUMMARY SHOULD BE READ IN CONJUNCTION WITH THE FULL TEXT OF
THE FOLLOWING ANNOUNCEMENT.
16 October 1997
Press Enquiries
Federal-Mogul T&N
Kimberly Welch +1 (248) 354 Sir Colin Hope +44 (171) 380
1916 8200
Morgan Stanley N M Rothschild
& Co. Limited & Sons Limited
Simon Robey +44 (171) 513 Nigel Higgins +44 (171) 280
5000 William Spurgin 5000
+44 (171) 280
5000
Brunswick Shandwick
Consultants
John Sunnucks +44 (171) 494 Gillian Pattison +44 (171) 329
0096
Morgan Stanley & Co. Limited, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting for Federal-
Mogul and the Offeror and no one else in connection with the Offer
and will not be responsible to anyone other than Federal-Mogul and
the Offeror for providing the protections afforded to customers of
Morgan Stanley & Co. Limited nor for giving advice in relation to
the Offer.
N M Rothschild & Sons Limited, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting for T&N and no
one else in connection with the Offer and will not be responsible
to anyone other than T&N for providing the protections afforded to
customers of N M Rothschild & Sons Limited nor for giving advice in
relation to the Offer.
The Offer will not be made, directly or indirectly, in or into
Canada.
There will be an analyst meeting at 09:30 and a press conference at
11:30, both at the Queen Charlotte Room, The Brewery, Chiswell
Street, EC1.<PAGE>
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO CANADA
FEDERAL-MOGUL CORPORATION ("Federal-Mogul")
RECOMMENDED CASH OFFER FOR T&N plc ("T&N")
1. INTRODUCTION
The boards of Federal-Mogul and T&N announce that they have reached
agreement on the terms of a recommended cash offer, to be made by
Morgan Stanley & Co. Limited on behalf of a wholly-owned indirect
subsidiary of Federal-Mogul, to acquire the whole of the issued
share capital of T&N. The Offer values each T&N Ordinary Share at
260 pence and T&N's entire issued ordinary share capital, assuming
that all outstanding options have been exercised and assuming full
take-up in respect of the scrip alternative to the 1997 second
interim dividend, declared on 28 August 1997, at approximately pounds 1.5
billion.
The Offer represents a premium of 42.9 per cent. to T&N's share
price at the close of business on 25 September 1997, the last
dealing day before the announcement that T&N had received an
approach from Federal-Mogul. The Offer represents premia of 65.1
per cent. and 73.6 per cent. to T&N's average share price in the
one month and three months, respectively, prior to 25 September
1997.
The directors of T&N intend to declare the T&N Dividend of 3 pence
(net) per T&N Ordinary Share, to be paid whether or not the Offer
becomes unconditional in all respects. The record date for the T&N
Dividend will be prior to the date on which the Offer becomes
unconditional in all respects. Further details of the T&N Dividend
will be set out in the formal Offer document.
The directors of T&N, who have been so advised by N M Rothschild &
Sons, consider the terms of the Offer to be fair and reasonable.
In providing advice to the board of T&N, N M Rothschild & Sons has
taken account of the commercial assessments of the directors of
T&N. Accordingly, the directors of T&N unanimously recommend T&N
shareholders to accept the Offer.
Cazenove & Co. are brokers to the Offer.
2. THE OFFER
The Offer, which will be subject to the conditions and further
terms set out in Appendix I and to be set out in the formal Offer
document when issued, will be made on the following basis:
For each T&N Ordinary Share 260 pence in cash
<PAGE>
3. FURTHER DETAILS OF THE OFFER
T&N Ordinary Shares will be acquired by the Offeror fully paid and
free from all liens, equities, charges, encumbrances and other
interests and together with all rights now or hereafter attaching
thereto, including the right to receive and retain all dividends
and other distributions declared, made or payable hereafter other
than the right to receive and retain the second interim dividend of
3.2 pence (net) per T&N Ordinary Share payable on 14 November 1997,
or the scrip alternative to such dividend, and the T&N Dividend of
3 pence (net) per T&N Ordinary Share.
The Offer will extend to any T&N Ordinary Shares which are
unconditionally allotted or issued prior to the date on which the
Offer closes (or such earlier date, not being earlier than the date
on which the Offer becomes unconditional as to acceptances or, if
later, the first closing date of the Offer, as Federal-Mogul may,
subject to the provisions of the City Code, decide) as a result of
the exercise of options under the T&N Share Option Schemes or
otherwise.
The conditions and further terms of the Offer are set out in
Appendix I.
4. INFORMATION RELATING TO FEDERAL-MOGUL
Federal-Mogul manufactures and distributes worldwide a broad range
of precision parts, primarily vehicular components for automobiles
and light trucks, heavy duty trucks, farm and construction vehicles
and industrial products. The company manufactures sealing systems,
fuel systems, engine bearings, lighting products, pistons and
chassis products. The company engineers and manufactures products
for original equipment manufacturers, principally the major
automotive manufacturers in the United States and Europe, and also
provides these and related products to aftermarket customers.
Federal-Mogul has a worldwide network of distribution points to
service its aftermarket customers. The group has 90 manufacturing
locations in 16 countries and employs approximately 15,700 people
worldwide.
For the twelve months to 30 June 1997, Federal-Mogul's results
under US GAAP comprised consolidated net income before exceptional
items of US$52.6 million (pounds 32.9 million) on net revenues of
US$1,939 million (pounds 1,212 million). As at 30 June 1997, Federal-
Mogul had net assets of US$335 million (pounds 209 million) and net
borrowings of US$327 million (pounds 204 million). Federal-Mogul's
common stock is traded on the New York Stock Exchange, with a
current equity market capitalisation of US$1,666 million (pounds 1,041
million).
The Offeror will be a UK company, wholly-owned indirectly by
Federal-Mogul, which will be incorporated to make the Offer on
behalf of Federal-Mogul.
5. INFORMATION RELATING TO T&N
T&N is a major supplier of high technology automotive components,
engineered products and industrial materials, with about 80 per
cent. of its sales relating to the world automotive industry. The
group is strategically focused on the transportation, marine and
power generation markets. T&N is structured into six global
Product Groups: Piston Products, Bearings, Friction Products,
Composites and Camshafts (incorporating Powder Metal Products),
Sealing Products and Engine Parts Aftermarket. T&N is also a
leading regional producer of Heat Transfer Products in South Africa
for domestic and export markets. T&N operates in around 200
locations in 24 countries, employs over 28,000 people worldwide and
serves customers in more than 150 countries. It also has technical
centres in the UK and Germany with a North American facility
opening in 1997.
For the twelve months to 30 June 1997, T&N's results, under UK GAAP
comprised consolidated net income before exceptional items of pounds 97.6
million (US$156.2 million) on net revenues of pounds 1,837 million
(US$2,939 million). As at 30 June 1997, T&N had net assets of pounds 142
million (US$228 million) and net borrowings of pounds 256 million (US$410
million).
6. BACKGROUND TO AND STRATEGIC RATIONALE FOR THE OFFER
In his address to shareholders, customers and employees in Federal-
Mogul's 1996 annual report, Chairman and Chief Executive Officer,
Dick Snell, stated that the company was moving forward in a new
direction, focusing on profitable growth with an emphasis on
enhancing systems and modules capabilities and expanding
internationally in both the original equipment manufacturers and
aftermarket segments. This objective was to be achieved through a
combination of organic growth and an aggressive acquisition
strategy. The acquisition of T&N represents a significant step in
meeting the second part of this objective.
The acquisition will create a highly competitive Tier I automotive
systems supplier worldwide.
The combined companies would have had combined revenues for 1996 of
US$5,160 million, over 43,700 employees, extensive operations in
North America, Europe and the rest of the world and a broad
customer base.
Federal-Mogul's management believes that, as a result of combining
complementary products on a worldwide basis, Federal-Mogul will
have the scale, reach, financial strength and technological
capabilities to achieve strong growth and to participate in the
consolidation of the automotive sector worldwide.
Given the expected synergies and increased market opportunities
created through this combination, Federal-Mogul's management
believes the acquisition will be beneficial to shareholders,
customers and employees.
. Products
The combined product range will position Federal-Mogul as a strong
worldwide supplier of engine and transmission parts with highly
competitive market positions in sealing products, engine bearings,
piston rings and pistons. Federal-Mogul believes that the
acquisition will:
- enhance systems capability through the ability to offer
customers engine and transmission parts;
- provide Federal-Mogul with full piston systems capabilities;
- enhance Federal-Mogul's sealing systems capabilities by
complementing its oil seals business with T&N's strong
European position in gaskets; and
- allow Federal-Mogul to gain entry into valvetrain systems
through T&N's camshaft and powdered metal business.
Based on combined historical 1996 revenues, Federal-Mogul's
revenues for engine systems and for sealing systems would have been
US$2,950 million and US$720 million respectively (representing
increases of 243% and 140% respectively, over Federal-Mogul's
standalone figures for that year). On the same basis, Federal-
Mogul's friction products would have had revenues of US$525
million.
. Geographic Profile
Federal-Mogul's reach will be enhanced by the complementary
geographic profile of T&N. Prior to the acquisition, 60% of
Federal-Mogul's revenues were generated in North America, 22% in
Europe and 18% in the rest of the world. The geographic profile of
the two companies combined, based on historical 1996 revenues,
would have been 42% North America, 44% Europe and 14% rest of
world. In addition, Federal-Mogul will gain access to many new
markets.
. Customers
The acquisition will enable Federal-Mogul to bring systems
solutions to original equipment manufacturers for a broad range of
hard engine products and to meet their increasing demands for
continuous product and cost improvement.
The acquisition strengthens Federal-Mogul's position as an
aftermarket supplier by combining Federal-Mogul's leading position
in the North American engine parts aftermarket with T&N's
attractive position in this sector, where it is present in Europe,
North America, Mexico, South America, South Africa and South East
Asia.
. Research and development
The acquisition will enhance Federal-Mogul's material development
and research and development capabilities and will position the
company as a significant force in patented technology products and
processes.
. Financial benefits
Federal-Mogul expects significant synergies and operating
efficiencies to be achieved from the integration of the two
businesses. Major synergies are expected to arise from
consolidating the aftermarket operations in North America and
Europe and from improved efficiencies in working practices. Other
synergies are expected in the areas of purchasing, production,
research and development, working capital efficiencies and in the
form of reduced capital expenditures.
Based on the information currently available to it, Federal-Mogul
is anticipating annual pre-tax synergies to reach in excess of
US$100 million starting from the second full year following the
acquisition.
Achieving these benefits will require a once-off restructuring
charge in the first year following the acquisition of an amount
approximately equal to the annual level of synergy benefits
achieved in the second year. This charge will be of an amount at
least equal to any synergy benefits achieved in the first year
following the acquisition.
Federal-Mogul expects that the acquisition will be modestly
accretive to earnings per share in 1998 and more accretive to
earnings per share in 1999. This statement should not be
interpreted to mean that the future earnings per share of Federal-
Mogul will necessarily be greater than the earnings per share of
Federal-Mogul for the financial year ended 31 December 1996.
Federal-Mogul also expects that the acquisition will provide
positive Economic Value Added and have a positive cash flow impact.
Federal-Mogul intends to maintain T&N's pounds 500 million insurance
policy in respect of asbestos. In addition, Federal-Mogul will
book an incremental pounds 367 million asbestos provision. No charge to
future earnings is anticipated for asbestos.
. Competition regulation
The Offer is subject to regulatory consents and confirmations being
obtained, both in the US and in a number of European countries.
Federal-Mogul and T&N are committed to working together to obtain
the regulatory approvals within the normal City Code timetable.
Federal-Mogul has agreed with T&N that divestitures of at least
some thin wall bearings assets may be required. Federal-Mogul is
confident that any such divestitures will not materially affect the
underlying strategic rationale for the acquisition. The parties
hope that it will not be necessary to extend the normal City Code
timetable, but Federal-Mogul has agreed to apply for extensions
from the Panel if necessary. The parties are confident that, in
the absence of unforeseen regulatory requirements, the Offer will
not lapse for lack of regulatory consents or confirmations.
Federal-Mogul and T&N agree that the acquisition should assist the
combined entity to compete in the intensely competitive automotive
components industry.
In order to re-inforce Federal-Mogul's commitment in relation to
the obtaining of relevant regulatory approvals, Federal-Mogul has
agreed, in the event that the Offer were to lapse as a result
solely of Federal-Mogul invoking any of conditions (b) to (d)
inclusive as set out in Appendix I, at the option of T&N to either
subscribe pounds 50 million for ordinary shares in T&N worth pounds 40 million
or to pay pounds 10 million in cash to T&N.
7. Financing
The cash required by Federal-Mogul to satisfy the consideration
payable to T&N shareholders under the Offer will be provided from
a bank facility, including long term components and bridge
components, under two credit agreements between Federal-Mogul, The
Chase Manhattan Bank and Chase Securities, Inc.
It is Federal-Mogul's intention to put in place a permanent capital
structure that reflects its financial goals. To this end, Federal-
Mogul intends in due course to refinance the funds provided from
the bridge components of this facility with an appropriate
combination of equity and debt financing.
Federal-Mogul may pursue a portion of this refinancing prior to the
completion of the Offer.
8. Financial effects of acceptance
The following tables set out, for illustrative purposes only and on
the bases and assumptions set out below, the financial effects of
acceptance on capital value and gross income for a holder of one
T&N Ordinary Share accepting the Offer if the Offer becomes or is
declared unconditional in all respects:
A. Increase in capital value Notes Pence
Cash consideration 260
Market value of one T&N Ordinary Share (i) 182
_______
Increase in capital value 78
_______
This represents an increase of 42.9%
B. Increase in gross income
Gross income from cash consideration (ii) 17.0
Gross dividend income from one T&N
Ordinary Share (iii) 7.5
______
Increase in gross income 9.5
______
This represents an increase of 126.7%
Notes:
(i) Based on the closing middle-market quotation of 182
pence per T&N Ordinary Share, as derived from the
London Stock Exchange Daily Official List, on 25
September 1997.
(ii) The gross income from the cash consideration has been
calculated on the assumption that the cash is re-
invested to yield 6.42 per cent. per annum, being the
gross yield shown by the FTSE Actuaries average gross
redemption yield for medium coupon British Government
securities of maturities of five to fifteen years on 14
October 1997 as published in the Financial Times on 15
October 1997, the latest practicable date prior to this
announcement.
(iii) The gross dividend income from T&N Ordinary Shares is
based on aggregate dividends of 6.0 pence (net) per T&N
Ordinary Share being the total of the 3.0 pence (net)
interim dividend for the six months ended 30 June 1996
and the 3.0 pence (net) special first interim dividend
in lieu of the final dividend for the financial year
ended 31 December 1996, together with an associated tax
credit of 20/80ths of the amount paid.
(iv) In assessing the financial effect of acceptance, no
account has been taken of the T&N Dividend and save as
disclosed in note (iii) above, no account has been
taken of any liability to taxation.
9. Management and employees
Federal-Mogul attaches great importance to the skills and
experience of the existing management and employees of T&N and
believes that as a result of the acquisition there will be greater
opportunities within the Federal-Mogul Group.
Federal-Mogul has given assurances to the Board of T&N that the
existing rights of employees of T&N, including pension rights, will
be fully safeguarded.
Sir Colin Hope has agreed to become International Advisor to
Federal-Mogul for up to two years from the completion of the
acquisition. In addition, two non-executive directors of T&N are
to be invited to join the Board of Federal-Mogul.
10. T&N Share Option Schemes
The Offeror will make appropriate proposals to holders of options
under the T&N Share Option Schemes, to the extent that options are
not exercised, once the Offer becomes or is declared unconditional
in all respects.
11. General
Neither Federal-Mogul, nor, so far as Federal-Mogul is aware, any
person acting in concert with Federal-Mogul, owns or controls any
T&N Ordinary Shares or has any option to acquire any T&N Ordinary
Shares.
The Offer will be on the terms and will be subject, inter alia, to
the conditions which are set out in Appendix I hereto and those
terms which will be set out in the formal offer document and such
further terms as may be required to comply with the provisions of
the City Code.
The availability of the Offer to persons not resident in the United
Kingdom may be affected by the laws of the relevant jurisdictions.
Persons who are not resident in the United Kingdom should inform
themselves about and observe any applicable requirements.
The Offer will not be made, directly or indirectly, in or into
Canada. Accordingly, copies of this announcement are not being,
and must not be, mailed, or otherwise distributed or sent in or
into Canada and persons receiving this announcement (including
custodians, nominees and trustees) must not distribute or send it
into or from Canada. Doing so may invalidate any purported
acceptance.
It is expected that the Offer document will be posted to T&N
Shareholders on 13 November 1997.
This announcement does not constitute an offer or any invitation to
purchase any securities.
Appendix II contains definitions of the terms used in this
announcement.
12. Bases and sources
(a) References to T&N's share price as at a specified date are
based upon the closing middle-market quotation for T&N
Ordinary Shares as derived from the London Stock Exchange
Daily Official List for that date.
(b) References to the value which the Offer places on T&N's
entire issued ordinary share capital have been calculated
using the Offer value of 260 pence per T&N Ordinary Share and
T&N's fully diluted ordinary share capital, meaning the
number of issued T&N Ordinary Shares as at 13 October 1997
and all outstanding options under the T&N Share Option
Schemes and assuming full take-up of the scrip alternative to
the 1997 second interim dividend.
(c) The premia of the Offer over T&N's average share price in the
one month and three months prior to 25 September 1997 have
been calculated using the Offer value of 260 pence per T&N
Ordinary Share and the arithmetic mean of the closing middle-
market quotations for T&N Ordinary Shares as derived from the
London Stock Exchange Daily Official List for the one month
of 157.5 pence and for the three months of 149.75 pence
respectively.
(d) The figures in paragraphs 4 and 5 for consolidated net income
before exceptional items, for Federal-Mogul and T&N
respectively, have been calculated by Morgan Stanley on the
basis of certain assumptions.
(e) The statements in paragraph 6 as to the combined revenues,
employees and geographic profile of Federal-Mogul and T&N for
1996 are derived from the published annual report and audited
annual financial statements for Federal-Mogul Group for the
year ended 31 December 1996 and the published consolidated
annual report and accounts for T&N for the year ended 31
December 1996. No account has been taken of differences
between UK GAAP and US GAAP. In addition, in the statements
in paragraph 6 as to the combined revenues, employees,
geographic profile, customers and financial benefits, no
account has been taken of any divestitures which might be
required by anti-trust authorities.
(f) The statements in paragraph 6 as to the effect of the
acquisition on Federal-Mogul's earnings per share assume that
Federal-Mogul has implemented an appropriate refinancing.
(g) Unless stated otherwise, US dollars have been converted into
pounds sterling and vice versa at the rate of 1.6 US dollars
to 1.0 pound sterling.
(h) The current equity market capitalisation of Federal-Mogul of
US$1,666 million has been calculated using the closing
middle-market quotation of Federal-Mogul's common stock on
the New York Stock Exchange as at 14 October 1997 and the
number of issued common stock as at 14 October 1997.
13. Certain Considerations
This announcement includes certain forward-looking statements,
including, without limitation, statements concerning the synergies
and accretion to Federal-Mogul's earnings per share expected by
Federal-Mogul and the other financial and non-financial benefits to
Federal-Mogul of the acquisition and the expectation that there
will be no future charges to earnings relating to asbestos. These
statements are based on best information currently available to
Federal-Mogul. Any forward-looking statements, however, involve
risks and uncertainties and are subject to change based on various
factors which might, in the future affect Federal-Mogul's financial
performance. Statements concerning synergies and other benefits
and accretion to Federal-Mogul's earnings per share expected by
Federal-Mogul are based on certain assumptions related to the
combined businesses of Federal-Mogul and T&N, developments and
conditions in the automotive components industry, general business
and economic conditions and other matters that are subject to
significant uncertainties and contingencies, many of which are
outside the control of Federal-Mogul and, therefore, such
statements are inherently imprecise and there can be no assurance
that they will, in fact, be realised.
16 October 1997
Morgan Stanley & Co. Limited, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting for Federal-
Mogul and the Offeror and no one else in connection with the Offer
and will not be responsible to anyone other than Federal-Mogul and
the Offeror for providing the protections afforded to customers of
Morgan Stanley & Co. Limited nor for giving advice in relation to
the Offer.
N M Rothschild & Sons Limited, which is regulated in the UK by The
Securities and Futures Authority Limited, is acting for T&N and no
one else in connection with the Offer and will not be responsible
to anyone other than T&N for providing the protections afforded to
customers of N M Rothschild & Sons Limited nor for giving advice in
relation to the Offer.
The Offer will not be made, directly or indirectly, in or into
Canada.
